Shine trader limited reports：
Who will be the next chairman of the Fed? For the first time in modern history, the answer to this question has been delayed for so long, and it is triggering financial markets to discuss the impact of Powell’s accidental replacement.
For months, economists and investors have expected Biden to re-elect Powell, rebuilding the president’s tradition of retaining the chairman of the Federal Reserve appointed by the previous administration in his first term. But Biden’s delay in making a decision, coupled with speculation that Powell may be replaced by board member Lael Brainard, made doubts spread in the market.
Bloomberg survey shows that economists still believe that Powell has a better chance of winning. However, Roberto Perli of Cornerstone Macro LLC-a former Fed official-found signs of concern about Powell being replaced in the U.S. bond market last week. Market participants said that given that the stock market performed well when Powell was the chairman, the reception may immediately trigger a market reaction, at least a temporary reaction.
”This will be a shock,” State Street senior global macro strategist Marvin Loh said by phone. “At present, inflation, the job market and other factors are constantly changing, and it is not necessary to interrupt the continuity that Powell has brought.”
The Fed has just begun to reduce the stimulus measures in the era of the epidemic. Although policymakers on Wednesday gave the expected time and speed for the complete end of the bond purchase plan, the prospects for interest rate hikes are still unclear.
Perli, the co-founder of Cornerstone Macro, said last week that one of the reasons why short-term yields have increased more than long-term yields is that the market is worried that Powell’s successor may not be able to prevent the hawks in the Federal Open Market Committee (FOMC) from forcibly raising interest rates early.
This trend has since eased, but volatility may rise again, as traders are evaluating whether high inflation may force the Fed to raise its benchmark interest rate next year or accelerate the pace of downsizing.
Reprint indicated source：Spark Global Limited information