Stocks Hit Session Highs On Report Hassett Emerges As Trump’s Next Fed Chair Pick

White House National Economic Council Director Kevin Hassett is the front runner to succeed Fed Chair Powell, according to Bloomberg, citing people familiar with the matter. Speaking on CNBC earlier, Treasury Secretary Bessent said that President Trump could announce his choice before Christmas.

The pick could very well be a trial balloon: for a long time the frontrunner was viewed as Fed governor Chris Waller, although his odds faded in recent weeks, amid speculation that Hassett was Trump’s favorite, and sure enough, Hassett’s odds spiked to a contract high 50% on Polymarket.

With Hassett, Trump would have a close ally whom the president knows well and trusts installed at the central bank, the BBG sources – who may well be leaking information at Trump’s behest – said.

“Hassett is seen as someone who would bring the president’s approach to interest rate cutting to the Fed, which Trump has long wanted to control”, Bloomberg reported, citing sources.

Hassett is also closely aligned to Trump’s view on the economy, including that interest rates need to be lowered. He told Fox News on Nov. 20 that he would “be cutting rates right now” if he were the chair of the Fed because “the data suggests that we should.” Hassett has also criticized the central bank for losing control of inflation in the wake of the pandemic.

The Fed has repeatedly served as a punching bag for Trump, with the president lambasting Powell for being “too late” to cut borrowing costs and publicly musing about firing him. The president has also assailed renovations on the central bank’s campus and the White House is currently engaged in litigation over Trump’s attempted dismissal of Fed Governor Lisa Cook. 

That’s put pressure on Treasury Secretary Scott Bessent, who is leading the selection process for the next Fed chair, to carefully balance candidates who are in favor of slashing borrowing costs and have the trust of both the president and financial markets.

Since the summer, Bessent has run the selection process to replace Powell, interviewing nearly a dozen candidates that have now been whittled down to five contenders: Hassett, Warsh, Waller, Fed Vice Chair for Supervision Michelle Bowman and BlackRock’s Rick Rieder. 

Bessent said interviews with those candidates will end this week. A smaller subset of finalists will soon meet with White House Chief of Staff Susie Wiles and Vice President JD Vance.

Still, Trump is known to make surprise personnel and policy decisions, meaning a nomination is not final until it’s made public, and as anything Trump, there is a substantial chance of a major surprise when the announcement arrives. 

The next chair is likely to be named to a 14-year Fed governor term that opens on Feb. 1. The term that expires at that time is currently held by Stephen Miran, who is on unpaid leave from the White House Council of Economic Advisers. Powell’s term as chair of the central bank ends in May 2026, though he could remain on the board for two more years as a governor.

The BBG report that a dovish replacement is coming helped push stocks to session highs…

… and sent 10Y yields below 10%, in a steepening move that send short-end yields even lower.