To The Moon

$iShares 20+ Year Treasury Bond ETF(TLT)$ $SPDR S&P 500 ETF Trust(SPY)$ $Cboe Volatility Index(VIX)$ I’m positioning into a volatility expansion as Trump’s Air Force One confirmation on 30Nov25, the pre-Christmas reveal window, and Powell’s 15May26 exit compress the transition timeline and force the market to reprice QT unwind risk, rate floors, and political influence on the 2026 curve in real time.

Markets are recalibrating because the handover period accelerates expectations around cuts, liquidity shifts, and cross-asset flow structures. Shutdown-driven data fog has amplified the dovish tilt.

Hassett’s Surge and the Political Pressure Dynamic

Trump confirmed on 30Nov25 that he has chosen the next Fed Chair. Treasury Secretary Bessent narrowed the finalist list to Hassett, Waller, Warsh, Rieder, and Bowman, signalling a pre-Christmas announcement. Hassett dominates the prediction landscape. Polymarket prints 57% on 01Dec25 with over 544K USD in volume, up from 52% late November. Kalshi holds 78%, a 23% weekly jump. Bloomberg tracked him at 56% on 28Nov25. His tenure within Trump’s economic structure positions him firmly behind a sub 4% rate stance and a growth-first approach. The post-shutdown interview yield dip below 4% on the 10-year confirms how sensitive duration markets are to his policy alignment.

Reuters highlighted Trump’s earlier pressure on Powell during the 2025 shutdown when cuts were withheld through the 43-day data blackout. That period exposed policy fractures and now strengthens the market’s expectation that Hassett will push for a more aggressive easing path.

Powell’s term ends on 15May26. The Fed delivered a 50bp cut in September to 4.50 to 4.75%, a 25bp cut in October to 4.00 to 4.25%, and held during the shutdown period. The rate now sits at 3.75 to 4.00% after unwinding the unreleased-data hold. CME FedWatch places an 85% probability on a December 25bp trim to 3.50 to 3.75% and projects three further cuts in 2026 toward a 2.90% year-end funds rate. Cleveland Fed trimmed mean core PCE nowcasts sit at 2.7% annualised for November, off the 2.91% August peak. Tariff passthrough risk remains capped at a 0.5% PCE impulse, giving Hassett scope for faster early 2026 easing.

Volatility signals are rising. $TLT Mar 2026 put skew sits at 1.2, up 15% week on week. $SPY options cluster around March 2026 maturities as hedgers shift into the transition window. $VIX futures dropped 12% on nomination clarity then rebounded intraday as rate-path divergence widened. Bank funding curves flattened with deposit betas resetting lower. Credit spreads are positioned for 75bp compression into Q2 2026 under a Hassett outcome. My base case assigns a 75% probability to a dovish transition with Senate confirmation probability near 60%. Trigger is the two-year yield holding below 3.80%. Invalidation is core PCE lifting above 3.0%.

Broader Candidate Landscape and Policy Fragility

Waller sits at 23% on Polymarket as at 01Dec25, with Bloomberg tracking him at 18% in late November. His measured approach, labour-market emphasis, and July inclination toward cuts position him as the continuity candidate. Warsh holds 14%, down from the 19% peak in November. Rieder remains at 3.9%. Bowman sits at 1%. These alternatives do not materially shift the curve but they influence volatility hedging in Treasury futures as traders adjust into the announcement event. I assign Waller a 20% probability and Warsh a 10% probability.

Transmission Through QT, Liquidity, Credit, and Crypto

I’m positioning with the view that a Hassett-led transition heightens QT reversal risk. A pause or unwind could release over 1.2T USD into duration extension and risk premia compression across financial assets. Tech benefits as terminal rate expectations move toward 3%. Bank net interest margins stabilise with nearly 100bp of funding relief projected through 2026. Bond convexity trades expand early as credibility expectations adjust. $BTC yield strategies shift toward 5 to 7% carry as correlation with the 10-year drifts to negative 0.45, down from negative 0.12. Tariff-linked inflation impulses near 0.5% remain offset by coordinated easing, supporting GDP near 1.6% into Q4 2026.

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