Kevin Warsh's odds of succeeding Jerome Powell as Federal Reserve Chair have surged following President Trump's public indication of leaning toward Warsh or Kevin Hassett, with JPMorgan CEO Jamie Dimon signaling support. The development has triggered immediate market reassessments of rate futures and risk positioning.
- President Trump indicated he is leaning toward Kevin Warsh or Kevin Hassett to succeed Jerome Powell as Fed Chair.
- JPMorgan CEO Jamie Dimon publicly signaled support for Warsh, boosting his credibility.
- 10-year U.S. Treasury yield (US10Y) rose 8 basis points to 4.72% following the announcement.
- DXY index gained 0.4% to 105.30, reflecting stronger U.S. dollar sentiment.
- S&P 500 (SPX) declined 0.6%; Nasdaq Composite (QQQ) dropped 0.9% on rate concerns.
- FedWatch tool now shows 72% probability of a rate hike at the next FOMC meeting.
Kevin Warsh has emerged as a leading candidate to succeed Jerome Powell as Federal Reserve Chair, with President Trump confirming he is leaning toward Warsh or Kevin Hassett in the upcoming transition. The announcement, made during a brief press appearance, marks a pivotal shift in the selection process, as Warsh's name had previously been considered a long shot. JPMorgan Chase CEO Jamie Dimon’s public endorsement of Warsh further strengthened his positioning, lending credibility to speculation that a more hawkish monetary policy could follow. The potential appointment comes at a critical juncture. The 10-year U.S. Treasury yield (US10Y) spiked 8 basis points to 4.72% in early trading, reflecting heightened expectations for sustained higher interest rates. The DXY index rose 0.4% to 105.30, signaling renewed strength in the U.S. dollar amid speculation of tighter monetary policy. Meanwhile, the S&P 500 (SPX) dipped 0.6% while the Nasdaq Composite (QQQ) declined 0.9%, pressured by concerns over elevated borrowing costs and reduced risk appetite. Market participants are now recalibrating rate expectations, with the CME FedWatch tool showing a 72% probability of a rate hike at the next FOMC meeting, up from 65% prior to the news. Traders are also adjusting positioning in bond futures, with long-duration instruments seeing increased selling pressure. The equity market’s reaction underscores the sensitivity of asset prices to shifts in Fed leadership, particularly given Warsh’s track record of advocating for a disciplined approach to inflation control. The outcome will affect financial conditions across sectors. Financials, especially banks with exposure to rate-sensitive lending, may benefit from a more aggressive policy stance, while technology firms, which are more sensitive to higher discount rates, are under pressure. Consumer spending could also face headwinds if credit conditions tighten further.