Market Reactions to “Wash Poised for Fed Chair Nomination”: Rate Cuts May Slow Down

Summary of market reactions to the potential nomination of Warsh as Fed Chair: 1. Mizuho Securities: If Warsh is elected, the market will feel continued pressure to cut interest rates. The market has misjudged the pace of rate cuts; the Fed is expected to cut rates more slowly than anticipated or hoped for. 2. Wilson Management: Warsh's tendency to cut rates conditional on balance sheet reduction could trigger market panic about liquidity contraction, leading to a sell-off in hedging assets such as gold, cryptocurrencies, and bonds. 3. National Australia Bank: Warsh's election would strengthen expectations that the Fed's independence will be protected, indicating that the Fed will not become a vassal of Trump or any other president's will and be arbitrarily controlled. 4. TD Securities: If Warsh is successfully elected as the next Fed Chair, the US Treasury yield curve is expected to steepen. However, any market reaction will be short-lived, as the new chair will need to convince the other members of the committee. 5. Commonwealth Bank of Australia: The market is familiar with Warsh, which will help stabilize sentiment to some extent. He is more like a "steady and reliable trader" than the type to make sweeping changes and start from scratch. 6. Carson Group: Warsh has historically been a hawk. If he enters the Fed advocating for significant rate cuts, he may not have much credibility within the Fed. We might even face a severely divided Fed that doesn't cut rates at all. 7. L&G Asset Management: Whoever Trump nominates will be more dovish than Powell. Although the market has already priced in future Fed rate cuts and a weaker dollar, long-term interest rates may rise due to risk premiums. Be wary of a "buy the rumor, sell the fact" reversal. (Jinshi)