Kevin Warsh Soars Ahead of Hassett in Polymarket, Kalshi Odds on Next Fed Chair After Trump Signal

President Donald Trump expressed reluctance about naming Kevin Hassett as the next Federal Reserve chair, signaling he prefers to keep his top economic advisor in the White House. During a Friday event, Trump said moving Hassett from his current role would deprive the administration of one of its most powerful economic communicators according to Reuters.

The move boosted odds for former Fed governor Kevin Warsh, who is now seen as the frontrunner to succeed Jerome Powell. Prediction markets like Kalshi and Polymarket reflected this shift, with Warsh's chances jumping to 59% and 60%, respectively, compared to Hassett's 14% and 16% as reported by Morningstar.

Warsh's rise in the polls has significant implications for the Fed's future direction. He is seen as more aligned with Trump's economic preferences than Hassett, who had previously been the leading contender for the post according to Bloomberg.

Trump's public support for keeping Hassett in the White House caught attention from market participants and Fed watchers. He emphasized that Hassett is a crucial voice on economic issues and that moving him to the Fed would weaken that presence as CNBC reported.

The remarks were made at a White House event ostensibly focused on rural healthcare. However, the economic implications of the comments quickly dominated the news cycle. Trump did not explicitly name a successor, but his comments were seen as a clear signal to markets and political observers according to BBC.

Following Trump's remarks, the stock and bond markets reacted sharply. U.S. equities fell, and bond yields rose as investors reevaluated their expectations for the central bank's future policy stance. The 10-year Treasury yield climbed above 4.2%, a level not seen since early September 2025 as Morningstar noted.

The market reaction was driven by concerns over who would lead the Fed next. Hassett had been seen as more likely to support aggressive rate cuts, while Warsh is viewed as more hawkish. This shift increased uncertainty for investors betting on the Fed's future policy trajectory according to Bloomberg.

Analysts are closely following the political dynamics surrounding the Fed nomination process. Senator Thom Tillis, a key Republican on the Senate Banking Committee, has vowed to oppose any Trump nominee until the Justice Department investigation into Powell is resolved as BBC reported.

The investigation into Powell, which involves potential criminal charges related to his testimony on Fed building renovations, has already created a rift between the administration and the central bank. Powell has called the probe unprecedented and politically motivated according to Seeking Alpha.

The uncertainty is also affecting how the Fed operates. Some analysts believe that if Trump succeeds in replacing Powell, it could further politicize the institution, making it harder to maintain its independence and credibility. Mohamed El-Erian, a prominent economist, has called for Powell to resign to protect the Fed's autonomy as MarketWatch reported.

With the current Fed chair's term ending in May, the timeline for a successor nomination is critical. Trump has indicated he plans to announce his choice in the coming weeks, but the process remains fraught with political and legal challenges. Until a new chair is confirmed, the Fed's independence and policy direction remain uncertain for market participants.