Stocks Surge as Kevin Hassett Emerges as Fed Chair Contender

The stock market reached session highs following reports that Kevin Hassett, Director of the White House National Economic Council, is the leading candidate to replace Jerome Powell as Chair of the Federal Reserve. According to Bloomberg, sources familiar with the situation indicated that President Trump may announce his choice before Christmas.

Hassett’s candidacy has gained momentum recently, particularly as speculation grew that he is favored by the president. His odds surged to a contract high of 50% on the prediction market platform Polymarket. This shift in prospects follows a period during which Chris Waller, a Fed governor, was considered the frontrunner. Sources suggest that Trump’s preference for Hassett is strategic, as it would place a trusted ally in a key position at the central bank.

The Bloomberg report highlights that Hassett aligns closely with Trump’s economic policies, particularly regarding interest rate cuts. He expressed on Fox News on November 20 that, if he were in Powell’s position, he would be “cutting rates right now” based on current economic data. This view resonates with Trump’s long-standing criticism of Powell, whom he has accused of being “too late” in reducing borrowing costs.

As the selection process for the next Fed chair unfolds, Treasury Secretary Scott Bessent is under pressure to select candidates who advocate for lower rates while maintaining trust among financial markets. Since the summer, Bessent has narrowed down the candidate field to five individuals, including Hassett, Kevin Warsh, Waller, Michelle Bowman, and Rick Rieder of BlackRock. Interviews with these candidates are expected to conclude this week. A smaller group of finalists will subsequently meet with Susie Wiles, White House Chief of Staff, and Vice President JD Vance.

Despite the current frontrunner status of Hassett, Trump’s history of unexpected personnel decisions means that any nomination remains tentative until officially announced. The new chair will likely be appointed to a 14-year term, commencing on February 1, 2024, following the expiration of Stephen Miran’s term, who is currently on unpaid leave from the White House Council of Economic Advisers.

While Powell’s tenure as Fed Chair concludes in May 2026, he may remain on the board for an additional two years. The anticipation surrounding a potential dovish successor contributed to a spike in stock prices, pushing yields on 10-year Treasury notes below 10% and causing declines in short-end yields.

In the weeks leading up to the announcement, market participants will closely watch the developments surrounding the Fed and the implications of Trump’s choice for the future direction of U.S. monetary policy.