Traders are now confident that Kevin Warsh will replace Jerome Powell sooner rather than later, and it could happen as early as mid-May. The catalyst: the Department of Justice dropping its criminal investigation into Powell, a move traders appear to see as clearing the path for Warsh's confirmation.
The market for when Warsh will be confirmed as the new Fed Chair jumped to 86% before May 15 and 96% before June.
Traders are coalescing on which senators will vote for Warsh. Specifically, the market shows an uptick for Sen. Rand Paul, who is now at 67%.
Jerome Powell
On Friday, ABC News reported that the Department of Justice is dropping its criminal investigation into Powell's building renovations. U.S. Attorney Jeanine Pirro said on X that a comprehensive report into Powell's spending is expected and that she's "confident the outcome will assist in resolving, once and for all, the questions that led this office to issue subpoenas."
The DOJ served subpoenas to Powell and several others regarding renovations he ordered for buildings in Washington and testimony Powell gave about those renovations. Powell claimed the subpoenas and investigation stemmed from White House pressure to oust him from his position.
Support for Warsh
The uptick in support, including from Paul, followed Warsh's confirmation hearing on Capitol Hill.
Some leaders, such as Sen. Thom Tillis, said they would not vote to confirm Warsh or any other candidate until the DOJ's investigation closed. Fox Business reported that Tillis called the investigation "bogus," suggesting its conclusion could bring him on board.
Paul appeared on Varney & Co. on Fox Business to discuss Warsh's confirmation hearing. Paul said he believes Warsh can do the job effectively without political influence.
"I don't think there's been any evidence in his career that he's been in the bag for any politician," Paul said.
The takeaway:
Kalshi markets now predict:
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