# Warsh Fed Nomination Reshapes Market Expectations

**Podcast:** Bloomberg Daybreak: US Edition
**Published:** 2026-01-30

## Transcript

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This is a breaking news update from Bloomberg.
Instant reaction and analysis from our 3,000 journalists and analysts around the world.
Breaking news now official.
A red headline crossing the Bloomberg terminal as President Trump has announced via his truth Social account that he is nominating former Fed Governor Kevin Warsh to succeed Jay Powell as chairman of the Federal Reserve when Chairman Powell's term expires in May.
And we are joined by Bloomberg International Economics and Policy Correspondent Michael McKee.
Mike, good morning.
This was an expected announcement.
Yes, uh, but Warsh has stayed in close contact with the President ever since, and of course his uh family, uh not not him as much, but his family has been uh big donors to the Republican Party.
So Walsh and the President have a relationship.
Uh the biggest issue has been whether Walsh would be too hawkish given that the president wants extremely low interest rates.
And of course, uh, we have seen a market reaction uh in the uh uh the the lead up to this official announcement.
Stocks falling, uh treasury yields rising just a bit.
Uh, what do you make of that market reaction, Mike?
Well, I think the bond market is and and the dollar are telling you what the markets think at the moment.
They're going on the fact that Warsh has been a hawk when he was on the Fed.
He was very reluctant to cut interest rates, even uh during the great financial crisis.
And so that's uh driving a steeper yield curve in the dollar fall.
Equities, I think you have to kind of also balance that out with the idea that we've got a potential war with Iran, we've got the blockade of Cuba, we've got tariffs on Canada, all kinds of things coming out of the White House uh in the last 24 hours that you try have to try to figure into your uh equity allocations.
I want to bring in uh Tom Keene and Paul Sweeney, co-ankers of Bloomberg Surveillance, coming up in just about eight minutes.
Of course, we're gonna have much more coverage on this official announcement of Kevin Walsh, uh the president's nominee to succeed Jay Powell.
Tom and Paul, your reaction this morning.
The reality is you never know.
Mike, you're the only one sold enough to remember this.
June 2nd, 1987, Paul Volcker uh uh excuse me, nominates Greenspan to succeed Paul Volker.
And we're like, does he play clarinet?
Do we know when these people are picked who they really are?
Well, you don't because they react to the circumstances in which they find themselves.
Now, the Fed has had a remarkable run with uh Greenspan being the one who basically thought we would have this uh tech revolution that would hold down inflation, and instead of raising rates, he let it ride.
Uh then we had Ben Bernanke, who was a the serious scholar of the depression and the mistakes that were made at the Fed come along just when we have the great financial crisis.
Uh Janet Yellen calm as they got out of the financial crisis, and uh and Powell has managed his way through a political minefield.
So we'll see what Kevin Warsh ends up doing.
What to you is the distinction between two quote unquote investment bankers, smooth guys like Jerome Powell and Kevin Warsh.
How are they different?
Well, they're very different in temperament, although they're both lawyers, and that's gonna be the interesting thing, is uh uh it it Walsh has taken economic classes, spent a lot of time studying the economy, but he is a lawyer by training, as is Jay Powell, and so it's a different kind of leadership for the Fed for the the last eight years and now it looks like 12 years.
But uh Walsh is very uh confident in himself and has very strong views about what the Fed should do.
Uh Powell is much more soft spoken and uh very good at lobbying up on Capitol Hill.
It'll be interesting to see if Walsh follows that model, which of course Powell suggested the next chair do at the news conference this week.
Mike, do we know what's what's the timeline here?
When does Mr.
Walsh assume his position?
And then what does Jay Powell do?
Those are the the big questions.
Well, Powell's term is up on May 23rd.
Okay.
There's still plenty of time to get him confirmed.
And while the Justice Department uh subpoena of uh Fed Records and Jay Powell's records uh is a problem for Tom Tillis in the Senate and Lisa Murkowski, you have to think that the president could just pick up the phone and call the U.S.
attorney in Washington, D.C.
and say, make that go away.
Okay.
Uh there are no charges there yet, so uh it's not something that it would be too hard to get out of.
And then uh the Senate has shown, as they did with uh Myron, uh Stephen Myron, that they can move very quickly to get somebody confirmed.
All right, uh Bloomberg's Mike McKee, along with uh Tom Keene and Paul Sweeney with uh Bloomberg Surveillance.
We want to bring in Bloomberg's Dan Curtis now to uh take a look at some of the market reaction to this.
Dan, of course, we had been seeing stocks fall, bonds rise, the dollars strengthening a bit uh ahead of Kevin Warsh's announcement.
What stands out to you this morning?
Yeah, good morning.
Uh what's standing out to me is the dollars found a little bit of a bid uh just off the back of this news.
It's it's gotten uh a little bit, it's it's been uh all over the place, but you know, kind of with Warsh coming in, he's seen as a little bit more of a hawk than who could have been named.
Uh overnight we did see some bids coming into into the dollar.
Uh that was at a session high a little bit earlier this morning.
It's come down since.
That has started to derail the gold rally.
A lot of the gold movement was around this debasement trade, and so a higher dollar could potentially hurt some of those hopes of gold.
So what had been a absolutely stellar spree uh within the gold buying, that has come back.
This dollar weakness has put a little bit more, uh a little bit of uh legs into gold, which is uh off the lows of the morning.
But in general, that's that's kind of the the main area that I'm watching.
In terms of equities, we do see uh SP futures off the session lows.
They've been climbing for a few hours.
Nothing too much off this news.
We have the two-year down coming in a little bit.
Again, we are expecting hawkish, uh kind of a hawkish move from Warsh.
That's been a generally more hawkish than it's than what would have been expected uh market sentiment.
So this is kind of countering that a little bit.
You know, you would expect uh the two-year yield to be up on a more hawkish move.
It's been pretty range-bound for a few months, but again, it's down one bit.
We're seeing a little lift in equities.
Markets generally taking this in stride.
I think this was pretty well seen.
So markets had time to position overnight, and uh right now it's kind of just playing out.
Yeah, so it's kind of a sell the rumor, pair back the news event, maybe uh as we uh get this announcement.
Thank you for this.
Bloomberg's Dan Curtis keeping an eye on the market reaction.
Tom, Paul, there are still a lot of questions that we need to get answered here now that the uh the the one big question has been answered.
Kevin Walsh is uh President Donald Trump's pick to succeed Jay Powell as the chairman of the Federal Reserve.
You know, the president had talked about the two Kevins, they like them a lot.
Now I guess we we wonder, you know, how dovish is Kevin Warsh gonna be once he comes in.
Chris Carlson the FT, and we called this article as an April Paul of last year.
And Chris wrote it up in his first item, his first bullet point, if you will, Nathan, was the idea of this guy's congenital against inflation.
He has a real history basis going back to his time on Wall Street of saying, you know, let's do it.
Uh Paul is old school the right phrase.
I think so.
Yeah.
I mean, it's old school.
Let's fight inflation.
And I believe, Nathan, that's opposite of the president of the United States.
I'm not sure how that, you know, fits together, but maybe we'll find out uh this morning with an announcement.
Yeah, we do will, once we do get that formal announcement uh outside of Truth Social, if the president does make some remarks, of course, you are going to hear them on Bloomberg Radio.
And then another uh unanswered question, of course, is how much of a fight is Kevin Walsh going to face in Senate confirmation when we've heard from Tom Tillis that uh unless the Jay Powell criminal investigation gets resolved, he's not gonna vote for anybody.
Yeah, I mean, I think Tom, that might go to the issue of um again, what role will the president have here as it relates to this investigation?
Michael McKee suggesting that maybe a phone call could be made and that can go away, and we can get a a clearer or cleaner uh uh confirmation here off the scene.
Tom Paul, thank you for all this.
And ahead of the market open, ahead of the official announcement of Kevin Walsh to be the next chairman of the Federal Reserve.
Futures are falling.
NASDAQ futures are down one half of one percent.
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