Overview
- At a White House event, President Trump told National Economic Council Director Kevin Hassett he wants to keep him in his current role, a remark that traders interpreted as reducing Hassett’s chances to be the next Fed chair.
- Following Trump’s comments, Kalshi and Polymarket odds shifted sharply toward former Fed Governor Kevin Warsh, with Kalshi pricing Warsh near 59% and Hassett near the mid-teens, and Fed Governor Christopher Waller edging ahead of Hassett in some markets.
- Treasury Secretary Scott Bessent said finalist interviews are complete, including BlackRock’s Rick Rieder, and indicated a decision is expected by the end of January, while Jerome Powell’s chair term ends in May.
- The DOJ’s criminal inquiry into Powell over his testimony on a $2.5 billion Fed headquarters renovation remains active; Powell denies wrongdoing, Vice Chair Philip Jefferson praised Powell’s integrity, and Hassett downplayed the probe as routine while Bessent criticized the Fed’s handling of the project.
- Sen. Thom Tillis and other lawmakers signaled they may hold Fed confirmations until the investigation is resolved, and investors recalibrated rate-cut expectations as analysts noted Warsh would likely be less dovish than Hassett, with Treasury yields ticking above 4.2%.