Kevin Hassett Fed Chair Odds Drop as Trump Shifts Focus to Kevin Warsh

The Federal Reserve chair race has taken a surprising turn with Kevin Hassett's odds plummeting and Kevin Warsh becoming the leading contender on prediction markets.

President Trump's recent public statements suggest he prefers to retain Kevin Hassett as his top economic advisor, casting doubt on his nomination to the Fed.

The DOJ investigation into current Fed Chair Jerome Powell has added political uncertainty, making it more difficult to confirm a candidate closely tied to the administration.

Prediction markets like Kalshi and Polymarket now show Kevin Warsh at a 60% probability of becoming the next Fed chair, while Hassett's odds have fallen to around 16%.

The shift in odds has led to a market response, including a drop in gold and silver prices and a rise in the 10-year Treasury yield.

Just days after being the leading candidate to replace Jerome Powell, Kevin Hassett is now in the shadows of the race for the most powerful economic post in Washington. President Trump's public remarks have thrown Hassett's nomination into doubt, with the administration seemingly pivoting toward Kevin Warsh, a former Fed governor with a more independent reputation. This shift has created a ripple through both financial markets and political circles, as the Fed chair selection process is one of the most consequential in economic policymaking.

Why Is Kevin Hassett No Longer the Favored Pick for Fed Chair?

Kevin Hassett, director of the National Economic Council, had long been seen as the most likely successor to Jerome Powell, who is stepping down from the role in May. But Trump's recent comments—made at a White House event—suggest he wants to keep Hassett in his current advisory role, calling him a "key asset" in economic messaging. The president praised Hassett for his recent media appearances and stated that his presence at the White House is more valuable than moving him to the Fed. This has shifted the odds dramatically in favor of Kevin Warsh, who now stands at 60% on prediction markets.

The uncertainty surrounding the nomination process is further compounded by the ongoing Justice Department investigation into Powell over his statements regarding the renovation of the Fed's headquarters. Some GOP lawmakers, including Senator Thom Tillis, have indicated they would delay the confirmation of any nominee until the probe is resolved. This has created a political headwind for Hassett, who is closely aligned with the administration and has publicly commented on the investigation.

What Does This Mean for the Markets and Investors?

The Fed chair race isn't just a political story—it's a market story. The central bank's policies influence everything from interest rates to inflation, and the identity of the next chair can shape the economic landscape for years. With Trump expressing a preference for Warsh, a more hawkish figure who supports higher interest rates, investors should brace for a different tone from the Fed than the more dovish stance Trump has publicly advocated for.

Prediction markets are already reacting, with a noticeable shift in asset prices. Gold and silver prices have fallen, while the 10-year Treasury yield has climbed to a four-month high. Bitcoin has also dipped, reflecting a broader shift in risk appetite. For retail investors, this suggests a potential shift in market sentiment toward a more hawkish Fed and higher borrowing costs. However, it's worth noting that Trump is known for mixed signals, and the final decision on who gets the nomination could still shift.

What Should Investors Watch Next?

The next few weeks will be crucial in determining who becomes the next Fed chair. Trump has said he plans to name a successor before May, when Powell's term ends, but he has yet to make a final decision. Investors should monitor developments on two fronts: first, the ongoing DOJ investigation into Powell and any political fallout it may cause; and second, the evolving odds on prediction markets, which often serve as a real-time barometer of political and market sentiment.

While Kevin Warsh now appears to be the favorite, nothing is certain in Trump's administration. The final decision may depend on a range of factors, including political pressure from Senate Republicans, the outcome of the Powell investigation, and even Trump's own shifting preferences. For now, the key takeaway is that the Fed chair race has become far more unpredictable than it was just a week ago, with major implications for both markets and monetary policy.