Trump to announce new Fed Chair
US bond yields are a touch higher and the dollar slightly firmer overnight on news that Donald Trump is set to announce Kevin Warsh as the new Fed Chair later today. Warsh – who served as a Fed Governor from 2006 to 2011 – is considered something of a monetary policy ‘hawk’ – both in terms of interest rates and using the central bank’s balance sheet to influence the economy – albeit he has supported lower rates in recent public comments (which you probably have to if you want the top Fed job at the current point in time). There may be issues around his Senate confirmation though, given the ongoing legal case against the current Fed Chair, Jerome Powell. In FX, the euro and sterling have slipped to around $1.1935 and $1.3765 against the dollar, down from their best levels yesterday of close to $1.20 and $1.3850 respectively. EURGBP is little changed from yesterday morning’s levels at about £0.8665.
US 10-year bond yields are about 5bps higher overnight, having finished broadly flat yesterday, while equivalent German and US yields are little changed this morning after registering modest declines yesterday. The futures market points to a soft opening for US equities later today, having been under pressure yesterday amid a decline in technology stocks, while European indices are marginally firmer at the start of play this morning, after closing lower for a second consecutive session on Thursday.
Yesterday’s economic data in the US were something of a mixed bag. The number of new jobless claimants nudged up last week but remained consistent with the current “low hiring/low firing” labour market. Capital goods orders and shipments both rose again in November, consistent with solid growth in business investment, which in turn is supporting solid economic growth overall.
Euro area ‘flash’ GDP data due this morning are expected to show the economy grew by 0.2% q-o-q and 1.3% y-o-y in the final quarter of 2025, according to the consensus forecast, following growth of 0.3% and 1.4% in Q3. Other Euro area data scheduled include the unemployment rate for December and the ECB’s latest survey of consumer inflation expectations. Elsewhere, mortgage lending/approvals are due in the UK and producer prices in the US.