🇺🇸💸 Traders Are Quietly Pricing In a “Post-Powell Pivot” — And It Has Everything To Do With Trump’s Next Fed Chair

Markets are no longer trading just 2025—they're already betting on 2026.

Something unusual is happening deep inside the futures market.

Over the past week, traders have been aggressively adding positions to the front end of the SOFR curve, signalling one thing:

> Wall Street now believes that after Powell’s term ends in May 2026, a Trump-appointed Fed Chair will push monetary policy toward faster, earlier easing.

This shift isn’t subtle.

It’s a repricing of the entire 2026 rate path.

Let’s break down what’s driving this—and what retail investors should watch next.

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🔥 Why SOFR Futures Are Suddenly Exploding in Volume

✔ Expectation #1: Trump has (almost) revealed his preferred Fed Chair

Trump hinted that the shortlist is effectively down to one name.

Markets immediately interpreted this as:

> Kevin Hassett = shadow Fed Chair

If Hassett is appointed, traders expect:

earlier cuts,

a more dovish policy stance,

and a Fed more tolerant of short-term inflation spikes.

Hence, heavy positioning in short-end futures.

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👀 Wall Street’s Concern: “Will the Fed Stay Independent?”

Hassett is known as:

a supply-side economist,

a tax-policy specialist,

a former CEA Chair under Trump,

smart, fast, confident — according to colleagues —

and very politically aligned with Trump.

This raises two red flags for investors:

🚩 1. Will he cut aggressively to support the White House agenda?

Fears of politically driven rate cuts are the core of the SOFR repricing.

🚩 2. Can he build consensus inside a divided FOMC?

The Fed is a committee.

A chair who cannot unify the board increases policy volatility — something markets hate.

These worries are now being priced in.

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🔄 But Here’s the Unexpected Twist

While Wall Street is nervous, there’s a lesser-known historical detail that complicates the narrative:

⭐ In 2018, Hassett publicly defended Powell’s independence — without White House approval.

When Trump was attacking Powell on Twitter and demanding lower rates, Hassett did something surprising:

> He went on TV without consulting the White House and declared Powell was “100% safe.”

This act was interpreted by economists as:

a rare break from Trump,

a willingness to shield the Fed from political interference,

and a sign that, at critical moments, Hassett prioritizes institutional integrity over loyalty.

This is why some academics believe:

> If Hassett turns dovish, it may be based on economic reasoning — not political obedience.

It doesn’t erase market fears, but it does complicate the simple “Trump puppet” narrative.

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🧩 Understanding Hassett’s Real Policy Compass

Hassett has a mixed record:

He aligns rhetorically with Trump.

He supports tax cuts and pro-growth policies.

He occasionally takes positions independent of political pressure.

He has defended Fed independence in the past.

The key insight:

He is not a typical “Trump loyalist” who simply follows orders.

He may end up being:

> dovish when data weakens, hawkish when needed — but not someone who will recklessly sacrifice the Fed’s credibility.

This is why economists call the 2018 episode a “revealing stress test” of his principles.

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📉 What Does This Mean for Markets?

1️⃣ Expect more volatility on the front end of the curve

SOFR futures will continue to swing as political headlines evolve.

2️⃣ The market is now trading Fed uncertainty, not just inflation

A change of Chair introduces:

new reaction functions,

new communication style,

new consensus dynamics.

This widens the distribution of outcomes.

3️⃣ The “independence premium” may shrink

When markets doubt the Fed’s autonomy, they demand higher risk premiums.

This can affect:

Treasury yields

equity multiples

risk appetite

USD volatility

4️⃣ For equities: think 2026, not just 2025

A dovish post-Powell Fed could become a tailwind for:

tech

real estate

high-beta growth

long-duration assets

…but only if credibility is preserved.

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📌 Retail Investor Takeaway

This story is not about whether Hassett is “good or bad.”

It’s about how markets react when political risk enters the monetary policy equation.

Right now, traders are signalling:

> “We think the next Fed Chair will cut sooner, faster, and more often than Powell.”

But the deeper question is:

> Will the next Chair protect the Fed’s independence when it truly matters?

Hassett’s 2018 move suggests: Maybe yes.

And that nuance is exactly why the market’s reaction has been sharp — but not panic-level.