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Why Do Markets Like Warsh Over Hassett?

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What’s in Today’s Report:

  • Why Do Markets Like Warsh Over Hassett?
  • Jobs Report Preview

Futures are trading lower with global equities this morning thanks to soft economic data out of Europe overnight with focus shifting to the November BLS jobs report today.

Economically, the EU Flash Composite PMI fell to 51.9 vs. (E) 52.8 in December from 52.8 in November while the U.K. Unemployment Rate rose to a 4+ year high of 5.1%; both data points raised concerns about the health of the global economy.

Today, focus will be on economic data early with the November BLS Employment Situation Report (E: 40K Job-Adds, 4.5% Unemployment Rate, 3.6% Wage Growth) and Retail Sales (E: 0.2%) due to be released ahead of the bell, both of which have the potential to move markets.

Additionally, data on Business Inventories (E: 0.2%), Housing Starts (E: 1.325M), the Flash Manufacturing PMI (E: 52.0) and Flash Services PMI (E: 53.9) for December will also be released and could move markets.

There are no Fed officials scheduled to speak today and earnings season is slowing down materially with just one quarterly report due today: LEN ($2.23) which will leave investors primarily focused on the key economic data due out early in the day.

 

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Hassett Fed Talk Adds Fuel to Dovish Market Expectations

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Sevens Report says stocks are rising on Fed-cut hopes — but warns bond markets see real risks.

Why Kevin Hassett as Fed Chair isn’t automatically bullish

Stocks have extended a two-week rally as expectations for a December Fed rate cut have surged from under 50% to nearly 100%. According to the Sevens Report, that shift began with dovish commentary from New York Fed President John Williams and a run of softer labor and inflation data.

But the firm highlighted a second catalyst behind the market’s bullish rate bets: President Trump’s near-confirmation that he intends to nominate Kevin Hassett as the next Federal Reserve chair. Among the finalists, Hassett is viewed as the most dovish, leading investors to anticipate a more accommodative policy stance once he takes over in mid-2026.

Still, Sevens cautioned that a highly dovish chair is not an automatic positive. While stocks cheered the development, bond markets reacted in the opposite direction. The 10-year yield rose 10 basis points last week, reflecting concerns that an overly soft approach could revive inflation — echoing the stop-and-go policy mistakes of the 1970s under Arthur Burns.

Sevens emphasized that Hassett has not shown any inclination to jeopardize Fed independence, but warned that even the perception of political pressure could push Treasury markets lower and yields higher. The firm noted that maintaining the Fed’s independence is “far more important for supporting equities” than whether end-2026 policy rates land at 3.625% or 2.875%.

Also, click here to view the full article published in Investing.com on December 5th, 2025. However, to see the Sevens Report’s full comments on the current market environment sign up here.

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

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Sevens Report Flags Bond Market Unease Over Possible Hassett Fed Pick

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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.

Also, click here to view the full article published in MarketWatch on November 4th, 2025. However, to see the Sevens Report’s full comments on the current market environment sign up here.

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.