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10YR USTS & DXY ARE DISCOUNTING HASSETT CHANCES AS THE NEX FED CHAIR

ADMIN || 26th November 2025

A market anchored by faith in monetary policy discipline may soon confront its most serious test yet: the prospect of a Federal Reserve led by Kevin Hassett.

Treasuries extended their rally overnight, with 10-year yields slipping below 4% for the first time since late October. The move reflects persistent unease over the durability of the US expansion and a market increasingly convinced that policy easing is drawing closer. That conviction now faces an entirely new source of uncertainty. National Economic Council Director Hassett has emerged as the frontrunner for the next Fed chair, jolting attention back to the intersection of politics and policy, and raising the question of whether the fragile stability that has held since April can endure.

In recent media appearances, Hassett made it clear his economic worldview aligns closely with President Donald Trump’s long-standing preference for low borrowing costs and credit-fueled growth. The concern among investors isn’t just the prospect of aggressive easing, but the implicit signal that policy would be shaped by politics rather than prudence. At 3%, inflation remains well above target — a fact that a Hassett-led Fed would appear to be content to overlook.

For now, markets aren’t biting on that risk. If a Hassett Fed were being taken seriously, yields would be rising, the dollar selling off, and gold finding another leg higher. That would be the natural reaction to the prospect of steep rate cuts in an economy still grappling with elevated inflation. Instead, the market’s reaction has been muted, suggesting investors still view the potential appointment as speculative and not yet actionable.

That restraint, however, may not last. The equilibrium that defined markets since April, a controlled rally in bonds and a broadly stable dollar, relies on confidence in the Fed’s independence. Hassett’s candidacy introduces a destabilizing narrative at a moment when markets are already on edge over AI valuations and a labor market teetering on the edge.

Still, the underlying macro story remains the same. Consumer sentiment is sliding, labor-market optimism is eroding and the economy is showing unmistakable signs of fatigue. For now, Treasuries are the anchor, embodying the investors’ conviction that the next sustained move in yields is lower. But if politics reclaims monetary policy, the calm that’s defined the post-April market could prove fleeting.

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