Happy Thursday, N2K reader!

This week’s world-famous news haiku competition™ is about how communities across the country came together in the face of the snowstorm. I believe that you, yes, you, dear reader, can craft a spectacular haiku on the subject. So: Send me your entry — to our spiffy email address, haiku at cheddar dot com — by noon ET Thursday (today!), for consideration by your Cheddar peers!

And now for something completely different.

Matt Davis — Need2Know Chedditor

News You Need2Know

What’s the stock market up to, eh?

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Companies mentioned in today’s newsletter

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Federal Reserve keeps interest rates unchanged — so there!

The Federal Reserve decided to keep its key interest rate unchanged at 3.6% this week, signaling confidence in the current state of the U.S. economy despite sustained political pressure to lower rates further. The pause follows three rate cuts in 2025 and comes as the Fed works to balance solid economic growth with persistent inflation concerns.

Fed Chair Jerome Powell emphasized the central bank’s independence in the face of sharp criticism and, of course, criminal investigations encouraged by President Donald Trump, who has pushed for aggressive rate reductions. “I’m strongly committed [to Fed independence], and so are my colleagues,” Powell assured reporters. Trump’s public attacks on Powell and attempts to replace him have drawn criticism even from Senate Republicans, who recently voiced support for Powell’s leadership.

While inflation remains elevated at 2.8%, the Fed is treading carefully. Referring to the effect of tariffs on inflation, Powell stated, “The expectation is that we will see the effects of tariffs peaking and then starting to come down... assuming there are no new major tariff increases.”

Fed governors Stephen Miran and Christopher Waller dissented from the latest decision, advocating for another quarter-point reduction. Miran, a Trump appointee, has consistently called for deeper cuts in recent meetings.

Meanwhile, experts warn that businesses’ sluggish hiring is dragging down consumer confidence, which hit an 11-year low this month. With significant challenges ahead, Powell stressed the importance of independence, including his decision to attend the Supreme Court’s hearing on Trump’s decision to fire Fed governor Lisa Cook earlier this month.

“I would say that that this case is perhaps the most important legal case” in the Fed’s history, Powell said. “And I as I thought about it, I thought, it might be hard to explain why I didn’t attend.”

Imagine! Viewing current events through the lens of history! Markets were unchanged on the news and even rose slightly yesterday.

Shutdown looms as DHS funding stalemate deepens

The federal government is on the brink of a partial shutdown as soon as this Friday as a stalemate over Department of Homeland Security and by extension, ICE funding, intensifies. The deadlock centers on the fatal shooting of 37-year-old nurse Alex Pretti by federal agents in Minneapolis, an event that has derailed a bipartisan spending agreement.

Senate Democrats are refusing to pass the $1.3 trillion funding package unless the DHS portion is removed or significantly reformed. Minority leader Chuck Schumer has taken a hard line, stating, “What ICE is doing is lawless disorder. What ICE is doing is state-sanctioned thuggery and it must be stopped,” although it’s worth pointing out that ICE already has funding at its current annual rate — $85 billion, up from $6 billion a decade ago — through 2029, thanks in part to Democrats’ votes to pass the Big Beautiful Bill earlier this year. So one could argue that this latest round of opposition to ICE funding comes a little too late to make any difference.

Senate Majority Leader John Thune has resisted Democratic demands to split the bill and force his party to go on the record in defense of DHS funding at a tricky time for the agency. Yesterday DHS announced it had placed the two ICE agents who shot Mr. Pretti “on leave.”

With both sides dug in, it’s anyone’s guess how this might all play out.

Home buyers walk away from deals at record levels

The U.S. housing market is facing upheaval as rising costs and economic uncertainty fuel a wave of canceled home deals. In December 2025 alone, over 40,000 home purchase agreements fell through, accounting for 16.3% of all homes under contract that month, according to Redfin. This marks the highest cancellation rate since Redfin began tracking the metric in 2017.

“High housing costs and rising inventory have made homebuyers more selective,” explained Chen Zhao, head of economics research at Redfin $RDFN ( ▼ 0.36% ) , talking to CNBC. With more sellers outnumbering buyers by a record margin, buyers are increasingly walking away in pursuit of better deals. In December, there were 47% more home sellers than buyers in the market — 631,535 more, to be exact — the largest gap since 2013.

The situation highlights broader fears around the economy and affordability. Ashley Rummage, a Raleigh-based real estate agent, told reporters, “I call 2025 the year of the seller because I had so many sellers reach out. They had a lot of fear around the economy, uncertainty around the current administration, mortgage rates, and affordability.”

Regionally, cities like Atlanta (22.5%), Jacksonville (20.6%), and Tampa (19.4%) experienced the highest percentages of contract cancellations, with closed sales predicted to remain weak throughout early 2026. As supply grows and home prices remain high, buyers are demanding more — and walking away when their expectations aren’t met. Still, home prices are still up 1.9% year on year, remarkably. How long can that last?

Song of the Day: Ari Lennox, ‘High Key’

Ari Lennox consistently nods back to R&B in its purest form, just like Jill Scott and Erykah Badu. On her new album “Vacancy,” however, she deftly balances that old-school soulfulness with modern flourishes that align with today’s sound du jour. In other words, she is just like this newsletter!