Prediction Markets Go Haywire After Trump Floats a New Fed Chair Favorite

If you were wondering whether the Federal Reserve chair job comes with a White House group chat invite… the answer is apparently yes, but also no, but also maybe if they get along good.

National Economic Council head Kevin Hassett went on Face the Nation this weekend and did the political equivalent of patting someone on the head while quietly moving the sharp objects out of reach.

Yes, he said, he’d absolutely listen to President Trump’s views on interest rates if he became Fed chair.

Yes, he said, Trump has “strong and well-founded opinions.” And yes, he’d even be happy to talk to Trump every day “until both of us are dead” because it would be “so much fun.”

But when it comes to actual rate decisions? Hassett wants everyone to know he’s the man in charge.

Trump can talk. The Fed will vote. And the President’s opinion carries exactly zero weight inside the FOMC room unless it’s backed by data (whatever you say Kevin).

That’s not independence with an asterisk. That’s independence with a smile and a firm “thanks for sharing.”

In case you can’t tell, Hassett is trying to thread a very specific needle here. He wants to acknowledge Trump’s very real desire to have a louder voice on interest rates, without lighting the Fed’s independence on fire in the process. 

At the same time, he’s clearly trying to reassure markets that the money printer isn’t about to get wheeled onto the campaign trail like a fog machine at a rally.

His framing was essentially: The president is one of many smart people with opinions… and opinions are free.

Votes, however, are not.

He even went out of his way to say FOMC members would be “free to reject” his own views as Fed chair… a subtle reminder that this isn’t a monarchy, no matter how much Twitter might want it to be

While Hassett was doing damage control on Sunday morning television, prediction markets were doing what they do best: overreacting immediately.

After Trump told The Wall Street Journal that Kevin Warsh had moved to the top of his list, Kalshi traders slammed the button like it was an earnings miss.

For instance, Warsh’s odds surged from 15% to as high as 40%... while Hassett’s odds dipped, briefly falling below 60% after sitting near 80% not long ago

That’s not a gentle repricing. That’s traders sprinting for the exits because Trump said, “Yes, I think he is.”

To be fair, Trump also did the classic cleanup act right after.

“I think you have Kevin and Kevin,” he said. “They’re both great.”

Which is exactly the kind of statement that calms nobody and confuses everyone.

This comes after Trump has spent months publicly pushing Jerome Powell to cut rates harder and faster. Powell didn’t bite. The Fed still cut rates (three-quarters of a point since September) but it happened on the Fed’s timeline, not Trump’s.

The big question markets are trying to answer now:

Does the next chair preserve that distance… or shorten the leash?

Hassett is signaling continuity with Powell’s structure, even if the tone is friendlier. Warsh, on the other hand, has a reputation for being more open to political coordination… which explains why his name alone was enough to send prediction markets scrambling.

But the real tell wasn’t the interview, it was the odds…

If this were purely academic, traders wouldn’t care. But they do.

Because the Fed chair isn’t a ceremonial role. It’s the person who decides whether asset prices float gently upward… or get punched in the face by higher-for-longer.

Hassett’s pitch is stability but less depressing than Powell. Warsh’s pitch is less defined, which markets interpret as optionality… and optionality always gets priced.

For now, Kalshi still has Hassett leading. But the gap narrowed fast, and that tells you everything you need to know.

At the time of publishing this article, Stocks.News doesn’t hold positions in companies mentioned in the article.