Market Reactions to "Warsh Potentially Nominated as Fed Chair": Rate Cuts May Slow Down

Odaily News: A summary of market reactions to "Warsh potentially being nominated as Fed Chair":

1. Mizuho Securities: If Warsh is elected, the market will feel sustained pressure for rate cuts. The market has misjudged the pace of rate cuts; it is expected that the Fed's rate cuts will be slower than what the market anticipates or hopes for.

2. Wilson Asset Management: Warsh's inclination to cut rates conditional on balance sheet reduction may trigger market panic over liquidity contraction, leading to sell-offs in hedging assets such as gold, cryptocurrencies, and bonds.

3. National Australia Bank: Warsh's election would reinforce the expectation that "the Fed's independence will be protected," indicating that the Fed will not become a subordinate to Trump or any other president's will, easily swayed by them.

4. TD Securities: If Warsh successfully becomes the next Fed Chair, the U.S. Treasury yield curve is expected to steepen. However, any market reaction will be short-lived because the new Chair will need to persuade other committee members.

5. Commonwealth Bank of Australia: The market is familiar with Warsh, which will help stabilize sentiment to some extent. He is more of a "steady and reliable operator" rather than the type to make drastic, sweeping changes.

6. Carson Group: Warsh has historically been a hawk. If he enters the Fed advocating for significant rate cuts, he may lack credibility within the Fed. We might even face a severely divided Fed that does not 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 expectations of future Fed rate cuts and a weaker dollar, long-term interest rates may rise due to increased risk premiums. Be cautious of a reversal scenario where "buy the rumor, sell the fact." (Jin10)