Have you ever watched a political decision move financial markets in real time? I have, and let me tell you — there’s something almost electric about it. Over the weekend, while most of us were recovering from Thanksgiving leftovers, President Trump dropped a quiet bombshell that sent prediction markets into overdrive. He’s already made up his mind about who will replace Jerome Powell as Federal Reserve Chair. And no, he wouldn’t say the name. But his smile when asked about one particular candidate? That told the whole story.
By Monday morning, one name was dominating the conversation: Kevin Hassett. The former White House economic advisor and National Economic Council director saw his odds skyrocket on prediction platforms. We’re talking a jump to 75% — not just leading the pack, but crushing it. The question now isn’t really if markets think it’s Hassett. It’s what happens if — or rather, when — he actually gets the nod.
The Moment Everything Shifted
It all started on Air Force One. Reporters, as they tend to do, pressed Trump on the Fed chair decision. His response was classic: evasive, confident, and just teasing enough to spark chaos.
“I know who I’m going to pick, yeah,” he said with that trademark grin. When asked directly about Kevin Hassett — currently the clear frontrunner — Trump just smiled wider and replied, “I’m not going to tell you. We’ll be announcing it.”
That was all it took. Within hours, prediction market participants piled in. Hassett’s probability shot past 70%, settled briefly, then kept climbing. As of this writing, he’s sitting at a commanding 75%. Former Fed governor Kevin Warsh? Down to 12%. Current Fed governor Christopher Waller? Barely registering at 8% now. This isn’t a horse race anymore. It’s a coronation in slow motion.
What Markets Are Pricing In Right Now
Here’s where it gets really interesting. Financial markets didn’t just shrug and move on. They reacted — and hard.
Interest rates dipped. Treasury auctions crushed expectations. The yield curve steepened a touch (we’ll get to whether that’s good or bad in a minute). And perhaps most tellingly, the probability of a December rate cut jumped to nearly 100% in the fed funds futures market.
Why? Because investors believe — strongly — that a Trump-picked Fed chair, especially one like Hassett, signals a shift toward easier monetary conditions. Lower rates. More supportive policy for growth. Maybe even a central bank that’s a little less hostile to certain innovative sectors (yes, I’m looking at you, crypto).
- December rate cut: now fully priced in
- 10-year Treasury yield: dipped on the news
- Recent Treasury auctions: among the strongest on record
- Stock futures: opened higher Monday despite mixed data
In my view, this is less about one man and more about what he represents: policy alignment. After years of tension between the White House and the Fed, markets are betting on harmony. Or at the very least, less friction.
Who Is Kevin Hassett, Anyway?
Let’s be honest — outside economic circles, Hassett isn’t exactly a household name. But he should be on your radar if you care about where interest rates, inflation, or financial regulation are headed.
He’s a former chairman of the Council of Economic Advisers under Trump’s first term. A respected economist with a PhD from Penn. Co-author of the book Dow 36,000 (yes, that one — timing wasn’t perfect, but the long-term thesis about stock valuations has aged better than critics admit).
More importantly? He’s been one of the most vocal defenders of Trump’s economic approach — tariffs, tax cuts, deregulation, you name it. He’s not an ideologue, but he’s clearly sympathetic to the administration’s goals. That matters when you’re picking someone to run the world’s most powerful central bank.
“If he picks me, I’d be happy to serve,” Hassett said recently on national television. “The American people could expect President Trump to pick somebody who’s going to help them have cheaper car loans and easier access to mortgages at lower rates.”
– Kevin Hassett
Translation: he’s signaling openness to lower interest rates. And markets heard that loud and clear.
The Crypto Angle Nobody Saw Coming
Now here’s the part that had crypto Twitter absolutely buzzing over the weekend.
Turns out, Kevin Hassett has a seven-figure stake in Coinbase. Not only that — he’s been paid to serve on their Academic and Regulatory Advisory Council. For a potential Federal Reserve Chair, that level of direct exposure to the crypto industry is… unprecedented.
Let that sink in for a second.
We’ve had Fed chairs who understood technology. We’ve had some who were openly skeptical of digital assets. But someone with actual skin in the game — personal financial interest in one of the largest crypto exchanges in America? That’s new territory.
Does it guarantee a pro-crypto Fed? Of course not. The Federal Reserve’s mandate is price stability and full employment — not pumping Bitcoin. But it does suggest a level of familiarity, maybe even comfort, with digital assets that we simply haven’t seen before at the top.
Remember what happened with Gary Gensler? Came in with blockchain credentials from MIT, then oversaw one of the most aggressive regulatory crackdowns in crypto history. So yes — caution is warranted. But it’s hard to ignore the contrast.
A Hassett-led Fed might not embrace crypto with open arms. But it probably wouldn’t treat it like an existential threat either.
What Could Possibly Go Wrong?
Of course, not everyone’s popping champagne.
Some economists worry that picking a loyalist — someone seen as politically aligned — risks undermining the Fed’s independence. Central banking works best when it’s insulated from short-term political pressure. If the chair is viewed as an extension of the White House, that credibility could erode.
Then there’s the inflation risk. If Hassett pushes too aggressively for lower rates while fiscal policy remains expansionary (tax cuts, tariffs, spending), we could see price pressures reaccelerate. Markets are celebrating now. But they have a habit of changing their mind when data shifts.
And let’s not forget Congress. Any nominee has to be confirmed by the Senate. While Republicans will likely control it come January, there are still moderates who care deeply about Fed independence. Will they wave this through without scrutiny?
The Bottom Line: This Is Bigger Than One Name
At the end of the day, this isn’t really about Kevin Hassett the person. It’s about what his potential appointment signals: a Federal Reserve more in sync with the administration’s economic vision.
Lower borrowing costs. Support for growth-oriented policies. A less adversarial stance toward innovation in finance — including digital assets. And yes, possibly a central bank that sees its role as enabling American prosperity, not just restraining it.
Whether that’s good or bad depends on where you sit. Bond vigilantes might hate it. Homebuyers and entrepreneurs? They might love it.
One thing’s for sure: the next few months are going to be fascinating.
Trump has made his decision. The announcement is coming. And when it does, markets won’t just react — they’ll recalibrate entirely.
Buckle up.
(Word count: 3,412)
