Hassett Odds-On Favorite as Trump’s Next Fed Chief. The Stock Market Might Be on Board With That.

Betting markets are leaning towards Director of the National Economic Council Kevin Hassett becoming the next Fed chair. (Kent Nishimura/Getty Images)

Key Points

• President Trump stated he has chosen a Federal Reserve Chairman successor, with prediction markets favoring Kevin Hassett.
• Kalshi and Polymarket prediction websites indicate Hassett’s odds of appointment are around 82% and 73%, respectively.
• Analysts suggest Hassett’s appointment would likely secure Senate confirmation and may not threaten Fed independence.

President Donald Trump has decided on his pick to replace Jerome Powell as Chairman of the Federal Reserve, with prediction websites pegging White House National Economic Council Director Kevin Hassett as the likely successor.

Trump told reporters on Air Force One on Sunday that “I know who I am going to pick,” but answered “I’m not telling you, we’ll be announcing it” when asked if he had opted to go with Hassett.

Hassett himself declined to speculate on his chances to succeed Powell when his term expires in May, telling CBS’s Face the Nation that “the American people could expect President Donald Trump to pick somebody who’s going to help them have cheaper car loans and easier access to mortgages at a lower rate.”

Hassett also touted market reaction to what he called a “rumor” of his place at the top of the president’s list, citing last week’s auction of $69 billion in new 2-year notes, which drew solid investor demand, and lower Treasury bond yields.

Benchmark 10-year Treasury note yields were last marked at 4.064%, up sharply from last week’s sub-4% levels, while the U.S. dollar index was last marked 0.4% lower against a basket of six global currencies. S&P 500 futures were off 0.6% at 9:08 a.m., while Dow Jones Industrial Average futures were down 0.4%.

The Kalshi prediction market website pegs the odds of a Hassett appointment at around 82%, with former Fed governor Kevin Warsh trading at around 13%. Polymarket puts Hassett’s odds to succeed Powell at around 73%.

President Donald Trump is expected to make his decision public before the Christmas break.

Paul Ashworth, chief North America economist at Capital Economics, thinks a Hassett appointment would likely secure a quick confirmation from the Senate.

“He’s an ex-Fed insider who, up until serving in the first Trump administration, had been an academic, worked at Republican-friendly think tanks, and also acted as a policy advisor to a succession of moderate Republican Presidents and nominees over the years,” he said.

“However, we suspect that, while he would pay lip service to Trump’s demands, we don’t think he would represent a genuine danger to the Fed’s independence,” he added.

That has been a key concern for markets, given the president’s frequent attacks on Chairman Powell and the Trump administration’s move to oust Fed governor Lisa Cook earlier this year.

Bank of America analysts, led by Ralf Preusser, said last month that “Fed independence risks are still seen as underpriced” by the market, and would likely manifest in the form of a weaker U.S. dollar and higher long term Treasury bond yields.

Louis Navellier of Navellier Calculated Investing, however, thinks president Trump is looking for someone to put a positive spin on the economy while at the same time leaning toward the kind of policy easing he expects from a Fed Chair.

“One thing that I can say about Kevin Hassett is that he always seems to be happy when he talks to the media,” Navellier said.

“Kevin is a ‘glass half full’ guy,” he added. “If President Donald Trump nominates him, he is obviously demanding loyalty, but also an upbeat economic spokesperson for the Fed.”

Write to Martin Baccardax at martin.baccardax@barrons.com