When Trump announced he would be picking Kevin Warsh to be the new Federal Reserve chief (or FedHead, if you’d prefer), it put a pause on growth momentum in the gold price and, apparently, that remains the quo.
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That Warsh was seen as a less radical pick than what other candidates might have represented is manifest in the gold price response, and to date, we’re still waiting to see just how well the market has read Warsh – or more importantly, perhaps, the likelihood he’ll push back on the President when he needs to.
But don’t expect to get a glimpse of what makes Warsh tick yet. Because next month’s FOMC meeting will still be chaired by Jerome Powell, the Fed chief installed by Trump last time he was President – a move the leader of the free world now regards as a ‘mistake.’ (Jerome Powell is also the Fed chief whom Trump vaguely threatened to arrest on criminal charges just a few weeks ago.)
In fact, he’ll be there until May, handling that meeting too. So Powell isn’t actually going to be out of the building until the June meeting.
But as for predicting the impending decision, it isn’t just me saying all of this. For one, nearly $8 million worth of trades are currently betting on a Fed hold next month when it comes to Kalshi’s prediction markets.
And the perhaps more sober traditional betting platform, CME Group’s FedWatch, also banks over a 90% chance of a pause from the still-headed-by-Jerome-Powell FOMC meeting when it comes around in March.
As for Kalshi predictions, looking a little further out, that market at least sees a 50% chance the Fed will cut in June; that’s when Warsh will firmly be in the chair. But 50% isn’t necessarily a bullish forecast.
Still, for now, expect more of the same. It mightn’t be until the second half of the year that we see some real volatility, which would be saying something given the story YTD.
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