Trump seems to rule out Hassett as Fed chair in comments.
Trump said that Hassett was good on TV today and that he “may want to keep him where he is”. He added that “we’ll see how it works out”.
Some Republican Senators have expressed reservations about Hassett because he’s so close to Trump, so he could be harder to confirm than the other three candidates.
We have seen some US dollar buying on this headline, as it underscores that the Fed decision is mostly about political credibility. Of the candidates, Hassett is seen as the least independent, which in turn is the most-dovish due to Trump’s longstanding desire to cut rates.
Along the same lines, gold is quickly lower on the headlines and has touched the lowest since Tuesday in a quick $35 decline (now a $60 decline).
Hassett has been the White House spokesman on economic matters as director of the National Economic Council. He frequently appears to speak about economic policies, including tariffs.
In the betting markets, Hasset is down to 17% from about 35% earlier today.
The prospect of a less-dovish Fed chair is also weighing slightly on equity markets, which fixed income markets are little changed.
The betting favorite for the job is Kevin Warsh, who was the runner up to Powell in Trump’s first term. He’s been relentlessly lobbying for the job for years after quitting the Fed as a governor in a tiff over quantitative easing during the financial crisis.
Earlier today, a report highlighted that Trump’s team also liked Blackrock fixed income CIO Rick Rieder in part because he had no ties to the Federal Reserve.
For what it’s worth, I don”t necessarily view Trump’s comments as overly telling. At the same time, the sharp declines in precious metals following the comments are an indication that plenty is riding on the decision. However the rise in the dollar after the headlines could be an indication to Trump that Hassett is the right pick, as the President wants a lower dollar.
Treasury Secretary Bessent said a decision will come before month end.
This article was written by Adam Button at investinglive.com.