Kevin Warsh Becomes Frontrunner for Fed Chief on Kalshi Prediction Market

The December 16 Kalshi prediction market update shows Kevin Warsh as the new frontrunner for Fed chief, with a 46% probability compared to Hassett’s 39% [1]. Just a week prior, Hassett had 77% odds, while Warsh’s were as low as 10%, indicating a significant market re-evaluation [1]. The shift stems from pushback against Hassett from high-level Trump allies and favorable remarks about Warsh from JPMorgan CEO Jamie Dimon [2][3]. Hassett is perceived as more dovish, advocating for immediate rate cuts [6], while Warsh is seen as a more traditional Fed pick with less clear immediate dovish signals.

On December 15, Wall Street futures firmed after Trump narrowed the Fed chair search to Warsh and Hassett, reflecting reduced uncertainty [4]. However, the 10-year Treasury yield’s 1bp decline to 4.168% on December 16 appears more closely tied to anticipation of upcoming economic data (November nonfarm payrolls and October retail sales) rather than direct reaction to the Fed chair news [5].

1. The dramatic surge in Warsh’s odds (36 percentage points in a week) underscores the influence of Wall Street and White House insiders on the nomination race [1][2][3].
2. The policy divergence between the dovish Hassett and traditional Warsh creates potential for market volatility depending on the final nominee, particularly around rate cut expectations.
3. The absence of immediate market data tied to the December 16 update (due to pre-market timing) leaves uncertainty about short-term reactions.

• Nomination Uncertainty
  : The race remains tight (46% vs. 39%), and additional shifts in White House sentiment or new candidate entries could create market volatility.
• Policy Shift Risk
  : A Warsh nomination could lead to slower rate cuts than the market currently expects under Hassett, potentially impacting rate-sensitive sectors like technology and bond prices.
• Institutional Independence Concerns
  : Hassett’s close ties to Trump have raised questions about the Fed’s independence, which could influence market confidence regardless of the final pick [1].
• Opportunity for Clarity
  : As the nomination process progresses, clearer policy signals from the candidates could reduce market uncertainty.

• Kevin Warsh is now the Kalshi favorite for Fed chief with 46% probability, overtaking Hassett (39%) on December 16, 2025.
• The shift followed pushback against Hassett from Trump allies and support from Jamie Dimon for Warsh.
• Hassett is viewed as more dovish (faster rate cuts), Warsh as more traditional.
• Wall Street futures firmed on December 15, but 10-year Treasury yield movement appears tied to upcoming economic data.
• Risks include nomination uncertainty, policy shift potential, and institutional independence concerns.