Powell fades while Hassett stirs fresh inflation fears. Google Searches for Dollar “Debasement” soared this quarter to the highest level in history. Gold has replaced bonds as a hedge against equities.

by

The market attaches a 95% probability to a Fed funds rate cut of 25bp on Wednesday, to 3.5-3.75%. The market expects two additional 25bp rate cuts in 2026 in March and June. To appease inflation hawks on the FOMC, Powell is expected to lean hawkish at the news conference, but it may not even matter after this meeting, with the next Fed chair — National Economic Council Director Kevin Hassett is the frontrunner — likely to join the Fed as soon as February, rendering Powell essentially a lame duck for the last few months of his chairmanship. Hassett is a well-known dove, and his appointment would likely increase inflation expectations, which is why the 10yr TY has increased in recent weeks.

The Great One’s 2065 Call: Lower Multiples, Higher Yields, For Decades📈

History shows that whenever yields have broken out of a multi-decade downtrend (descending channel), the regime of higher yields lasted for decades afterward.

If the 1920–1981 playbook repeats, we’re now at the start of a 40-year secular rise in yields. I don’t expect we’ll retest the 1981 extremes, but lower multiples look highly probable.

P.S Someone please bookmark this and repost in 2065 so we can check if the Great One called it right.

Thanks for reading,

God bless and godspeed.

Kevin Hassett has surged to 79% odds on prediction markets as Trump’s pick for the next Fed chair. Powell’s term ends in May 2026, but Hassett could be nominated as early as February, raising fears of a dovish pivot.

https://economictimes.indiatimes.com/news/international/us/federal-reserve-chair-race-is-kevin-hassett-now-the-clear-frontrunner-for-the-next-fed-chair-heres-all-you-need-to-know-about-trumps-favorite/articleshow/125717806.cms