Core Viewpoint - The potential nomination of Kevin Hassett as the next Federal Reserve Chairman has shifted, with President Trump expressing a desire for Hassett to remain in his current role, leading to a decrease in Hassett's nomination probability and an increase for Kevin Walsh [1][3]. Market Reaction - Following Trump's comments, U.S. stock and bond markets experienced a sell-off, with the 10-year Treasury yield surpassing 4.2% for the first time since early September, and all three major stock indices reversing their initial gains [3]. - Investors are concerned that Hassett, viewed as a candidate likely to support interest rate cuts, may not be nominated, contributing to market volatility [3]. Nomination Probabilities - Hassett's probability of becoming the next Fed Chairman had previously been as high as 90% before mid-December last year, but has since declined due to opposition from Trump's allies [4][5]. - Current predictions show Walsh's nomination probability rising to 58% on Kalshi and 60% on Polymarket, while Hassett's has dropped to 15% and 16% respectively [1][3]. Future Outlook - Despite ongoing investigations into current Fed Chairman Powell, market expectations for the Fed's interest rate policy remain largely unchanged, with investors anticipating a total of 54 basis points in rate cuts by year-end [6][8]. - Key upcoming economic data, including the core Personal Consumption Expenditures (PCE) price index and the Purchasing Managers' Index (PMI), will be crucial in shaping future Fed policy expectations [8].