{"id":53125,"date":"2025-08-07T23:09:09","date_gmt":"2025-08-07T23:09:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/53125\/"},"modified":"2025-08-07T23:09:09","modified_gmt":"2025-08-07T23:09:09","slug":"investors-game-out-market-reaction-to-fed-chair-replacement-favorites","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/53125\/","title":{"rendered":"Investors game out market reaction to Fed chair replacement favorites"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Independence of the Fed remains the key issue for most investors and market reactions could vary depending on how closely prospective candidates to replace Powell are perceived to be aligned with Trump.Jeenah Moon\/Reuters<\/p>\n

As U.S. President Donald Trump narrows his shortlist for the next Federal Reserve chair, investors and strategists are closely analyzing the range of possible market reactions to each potential nominee poised to replace Jerome Powell when his term is over. Reactions may include a positive move if current Fed Governor Christopher Waller is picked, signaling continuity of leadership, to a possible negative response if the nominee to replace Powell is viewed as aligned with Trump, a situation that could call into question the independence of the central bank from the White House.<\/p>\n

While Trump has for months flirted with ousting Powell, the unexpected announcement last week of Governor Adriana Kugler\u2019s exit from the board has brought fresh attention to the composition and leadership of the monetary policy-making body.<\/p>\n

Earlier in the week, Trump indicated he had a short list of four possible replacements<\/a> for Powell, including economic adviser Kevin Hassett and former Fed governor and Trump supporter Kevin Warsh, and two other people.<\/p>\n

On Thursday, Trump named Council of Economic Advisers Chairman Stephen Miran to serve out the rest of Kugler\u2019s term, leaving the choice of a permanent replacement for a later date.<\/p>\n

Bloomberg News on Thursday reported Waller is a top candidate for Fed chair within the Trump team, citing sources.<\/p>\n

Trump to nominate top economic aide Stephen Miran to fill open spot on Federal Reserve board<\/a><\/p>\n

\u201cAfter months of extensive telegraphing from the White House, investors have come to expect the next chair to be a Trump loyalist with an avowed dovish bias,\u201d said Karl Schamotta, chief market strategist at Corpay in Toronto.<\/p>\n

Online betting markets Polymarket and Kalshi on Thursday showed Waller, Hassett and Warsh among those most likely to replace Powell.<\/p>\n

Broadly, the independence of the Fed remains the key issue for most investors and market reactions could vary depending on how closely prospective candidates to replace Powell are perceived to be aligned with Trump.<\/p>\n

\u201cPresident Trump will continue to nominate the most competent and experienced individuals to deliver on his pledge to Make America Wealthy Again. Unless it comes from President Trump himself, however, any discussion about personnel decisions should be regarded as pure speculation,\u201d said White House spokesperson Kush Desai.<\/p>\n

Markets were likely to react most favorably should Trump nominate Waller to Powell\u2019s job, several investors said. Waller, an advocate for an immediate interest rate cut, said last month he would accept the job as head of the U.S. central bank if asked by Trump.<\/p>\n

In a statement following his dissenting vote against the Federal Open Market Committee\u2019s decision to hold rates steady in July, Waller said the Fed\u2019s \u2019wait-and-see approach\u2019 to monetary policy was \u201coverly cautious.\u201d<\/p>\n

\u201cWaller would probably represent the most continuity with the current style of Fed management,\u201d said Steven Englander, head of global G10 FX research at Standard Chartered. Guy LeBas, chief fixed income strategist at asset manager Janney Capital Management, said that, while there isn\u2019t a strong market opinion of policy differences under a Waller and Warsh pick, Waller has been flexible and fast-moving in his time at the Fed and has largely defied any hawkish or dovish bias.<\/p>\n

Opinion: A scary chart shows why diminished Fed independence may outlast this administration<\/a><\/p>\n

As such, should Trump seek to name him chair it would likely elicit a positive response from markets, said Mark Malek, chief investment officer of Siebert Financial.<\/p>\n

The Federal Reserve declined to comment.<\/p>\n

A potentially more negative reaction may come should the nominee to replace Powell be viewed as a Trump ally.<\/p>\n

\u201cThe more the candidate is seen as being aligned with the White House, the more detrimental it is going to be to U.S. assets in general,\u201d Felix Vezina-Poirier, strategist for BCA Research, said.<\/p>\n

That means a Hassett nomination could spur a negative reaction with longer-term yields rising and the dollar selling off, analysts said.<\/p>\n

With Hassett viewed as very closely aligned with the White House, his nomination would not bode well for the independence of the Fed, some analysts said.<\/p>\n

A request for comment was sent to Hassett via the White House, but he did not respond immediately.<\/p>\n

Warsh might also prompt some market worry, investors and analysts said.<\/p>\n

Warsh, currently a visiting fellow at Stanford University\u2019s Hoover Institution, was a Fed governor from February, 2006 to April, 2011, leaving about a year before Powell became a governor.<\/p>\n

During his tenure at the Fed, Warsh was frequently an advocate for tighter, not easier, monetary policy and criticized the Fed\u2019s expansionary balance sheet policy.<\/p>\n

Fed\u2019s reticence on rate cuts forces market to rethink outlook<\/a><\/p>\n

\u201cWith a long history of taking overtly political views on policy \u2013 especially in the opinion pages \u2013 former governor Kevin Warsh is more of a wild card,\u201d Corpay\u2019s Schamotta said.<\/p>\n

\u201cAlthough investors might welcome his recent Damascene conversion to lowering rates, it comes after years of criticizing the Fed for keeping policy too loose, and has been paired with a commitment to reducing the central bank\u2019s balance sheet more quickly \u2013 something that could push borrowing costs higher for an already-stretched government,\u201d he said.<\/p>\n

Warsh did not immediately respond to a request for comment. Still, the biggest knock for markets could come if Trump were to nominate a candidate who is viewed as lacking Federal Reserve or economic experience.<\/p>\n

Such a move would also raise questions about Fed independence, investors said.<\/p>\n

\u201cThe more significant question is whether any of these Fed candidates would be more or less \u201ccaptured\u201d by fiscal interests from the White House,\u201d LeBas said. <\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Independence of the Fed remains the key issue for most investors and market…\n","protected":false},"author":2,"featured_media":53126,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[901,888,902,879,877,903,45,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,100,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-53125","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-business","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-markets","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/53125","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=53125"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/53125\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/53126"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=53125"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=53125"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=53125"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}