Report: Bond investors warn the U.S. Treasury about the possibility of Hasset becoming the Chairman of the Federal Reserve

On Wednesday, according to media reports citing multiple informed sources, bond investors have expressed concerns to the U.S. Treasury about the potential appointment of Kevin Hassett as the Chairman of the Federal Reserve. Investors worry that Hassett, the current Director of the White House National Economic Council, may significantly cut interest rates to please President Donald Trump. These concerns have been raised in private communications.

Media reports indicate that the discussions took place in November, involving executives from major Wall Street investment banks, asset management giants, and other large participants in the U.S. bond market. At that time, Treasury Secretary Steven Mnuchin had not yet conducted the final round of interviews for the Federal Reserve Chairman candidates.

Members of the Treasury Borrowing Advisory Committee were also among those consulted. The report adds that when Hassett met with the committee earlier this year, the focus of the discussion was on the White House's policy priorities, including the issue of Mexican drug cartels, rather than market topics.

Reports indicate that bankers and investors are concerned that even if inflation remains above the Federal Reserve's 2% target, Hassett may still push for indiscriminate rate cuts.

Recently, Trump indicated that the selection of the Federal Reserve Chairman is expected to be finalized "early next year," which also means that the selection process, which has been ongoing for several months, will continue to be prolonged. The Trump team also informed candidates that a scheduled interview with Vice President Mike Pence on Wednesday had been canceled, but did not specify the reason for the cancellation. Trump also stated that he has already made a decision on the candidate and praised Hassett, suggesting that Hassett is the next Chairman of the Federal Reserve:

Trump said at an event shortly after a Cabinet meeting on Tuesday, "I guess there’s a potential Federal Reserve Chairman here. I don’t know who qualifies to say the word ‘potential.’ I can tell you he’s a respected person. Thank you, Kevin."

However, Trump is known for often making unexpected personnel and policy decisions, so nominations are not considered final until officially announced.

The current market generally believes that Hassett's selection as Federal Reserve Chairman has been "internally confirmed," reinforcing market bets on a dovish stance. However, analysts point out that stronger growth and stubborn inflation in 2026 challenge this narrative. In the short term, signals of a policy shift have driven U.S. stocks and rate cut expectations to rise in tandem; however, if inflation rises again next year, the credibility of the central bank will be tested, and the market may tighten financial conditions in reverse, leading to a significant increase in volatility