Prediction Markets Bet on Lower Inflation Under Hassett as Fed Chair

Prediction markets are flashing a clear signal: traders are betting that a Hassett-led Federal Reserve would mean lower inflation ahead.

### The Crowd's Verdict

Forget the pundits and the Wall Street analyst notes. The real-time, money-where-your-mouth-is wisdom of prediction markets is pricing in a dovish pivot. The logic is straightforward—markets anticipate that a new chair would steer policy toward taming price pressures more aggressively than the current trajectory.

### What This Means for Your Portfolio

This isn't just an academic exercise for econ PhDs. The market's expectation of lower inflation directly impacts asset valuations across the board. It reshapes the outlook for interest rates, bond yields, and risk appetite. Suddenly, long-duration growth assets get a second look, while traditional inflation hedges might lose their luster. It's a classic case of the market front-running official policy—because why wait for the press conference when you can profit from the rumor?

### A Cynical Take

Of course, this entire forecast hinges on the belief that changing the person at the top changes the institution's DNA—a faith-based investment strategy if there ever was one. It's the financial equivalent of hoping a new captain will calm a stormy sea, conveniently ignoring that the ship, the crew, and the raging weather are all exactly the same.

The bet is placed. Now we wait to see if the market, for once, is smarter than the economists.

Kevin, who directs the National Economic Council, climbed fast to the front of the race in the past week. The odds on Polymarket moved from about 30% at the end of November to 73% by Friday, putting him well ahead of any other rumored candidate.

Cryptopolitan had reported that Trump said during a WHITE House event on Wednesday:- “I guess a potential Fed Chair is here too, I don’t know, are we allowed to say that? Potential. He’s a respected person, that I can tell you. Thank you, Kevin.”

Bond traders respond as Hassett leads

Naturally, Treasury markets reacted as Kevin’s chances went up. Since Bloomberg reported last Tuesday that he was the top contender, the 10-year yield has surged by 14 basis points as of press time, showing investors adjusting to the idea of a Fed chair who has publicly pushed for sharp rate cuts in the past.

The jump in yields came even though Kevin is known for arguing for lower borrowing costs, meaning the trading floor sees the possibility of inflation returning if cuts come too fast.

That view showed up in comments from Michael Brown, who serves as senior research strategist at Pepperstone. Michael said, “That’s basically because we know that Kevin Hassett is very, very loyal to President Trump. It is almost solely on the back of Hassett, given that we’ve had nothing really else to trade on this week.”

His point was also mirrored in the currency market, where the U.S. Dollar Index dropped from 99 to 98 after the Bloomberg report, even though stronger Treasury yields typically support the dollar.

The combination of a weaker dollar and higher yields has become part of the market’s judgment of what Kevin at the Fed could mean. It also fed into the call from Ryan Swift, the chief bond strategist at BCA Research, who wrote, “We continue to recommend Treasury curve steepeners as a high conviction trade heading into 2026,” adding that he expected long-term yields to keep climbing on the back of the current expectations.

Some investors are reading Kevin’s rise as an early signal that inflation may sit above the Fed’s target for longer. Art Hogan, who works as chief market strategist at B. Riley Wealth Management, said, “I think that investors are looking at the whole picture and saying, ‘well, inflation is certainly going to be reported above the Fed’s target for quite some time.’”

There is also the structural limit on how much a Fed chair can do without support. The chair holds only one vote out of twelve on the Federal Open Market Committee, which means Kevin WOULD still need agreement from officials who lean more hawkish.

Cryptopolitan predicts that convincing those members to back fast or DEEP rate cuts would not be guaranteed, even with Trump’s backing.

Join a premium crypto trading community free for 30 days - normally $100/mo.