Sevens Report Flags Bond Market Unease Over Possible Hassett Fed Pick
Stocks welcome dovish signals, but fixed-income markets are growing cautious.
Why Kevin Hassett’s appointment to the Fed chair isn’t automatically bullish for bonds
The Sevens Report highlights that falling rate expectations are being driven by more than just incoming data. Tom Essaye points to speculation around Kevin Hassett emerging as a leading candidate for Fed chair as a key influence behind recent market behavior.
While equities have reacted favorably to the prospect of a more dovish Fed, the bond market has responded far more defensively. Essaye notes that fixed-income investors are uneasy about the risk that an aggressively dovish chair could undermine the Fed’s credibility, potentially allowing inflation pressures to re-emerge.
That concern appears to be showing up in yields, which backed up after briefly dipping below 4%. Although Essaye stresses there is no evidence that Hassett would compromise Fed independence, uncertainty alone has been enough to inject caution into bond markets.
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