Prediction markets price in lower inflation under Hassett as Fed chair

Prediction markets are leaning toward Kevin Hassett taking over the Federal Reserve, and traders are tying that call directly to expectations of lower inflation, according to comments shared online by Jason Miller, who served as a senior advisor on Donald Trump’s transition team.

Jason pointed out that Trump has not announced a decision yet but argued that if Trump selects Kevin, it would align with the way markets are already behaving.

As you can see below, Jason shared alongside his post a Kalshi chart showing Kevin’s rising odds paired with softer future inflation pricing, fueled by the platform’s gamblers.

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.

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