Market Update - December 2nd 2025

It would be a stretch to call this a “quiet” week for economic news—there’s plenty on the calendar, including PCE inflation and new manufacturing data that matter a great deal to regions like Omaha and the Midwest, where agriculture, transportation, and industrial production are key economic pillars. Even so, the bond market seems perfectly comfortable staying in its current range until next week, when the real action begins. With the final Fed meeting of the year set for December 9–10, policymakers are now in their blackout period, so markets won’t hear anything new from them until after the decision. Still, recent signals have been clear enough: markets are pricing in roughly an 88% chance of a rate cut.

But strong conviction hasn’t translated into better rate sheets. Even if the Fed cuts next week, the path to additional cuts in 2026 looks uncertain, especially for lenders and borrowers across the Midwest who are highly sensitive to long-term rate direction. The first major test comes with an unusually important Employment Report on December 16—a “double release” covering both October and November. For a Fed that remains deeply divided, any further softening in the labor market could tip the scales toward more cuts, which would resonate through mortgage and business lending across Nebraska, Iowa, Kansas, and the Dakotas.

Looking down the road, markets also expect clarity soon on who will replace Jerome Powell as Federal Reserve Chair, with odds currently favoring White House Economic Adviser Kevin Hassett. That announcement—likely within the next month—could spark additional market volatility. A “shadow Chair” often begins signaling policy leanings ahead of formally taking over, and if those signals diverge from Powell’s, markets will need to reconcile the difference. How that dynamic unfolds could play a meaningful role in shaping rate expectations heading into the spring homebuying season in Omaha and throughout the Midwest.