Trump's Shift on Hasset Slashes Fed Rate Cut Expectations

Odaily Planet Daily News: U.S. Treasury prices fell as traders cut expectations for two rate cuts by the U.S. Federal Reserve in 2026, following hints from Donald Trump that he might nominate someone other than Kevin Hassett, the director of the National Economic Council, to succeed Jerome Powell. The decline in U.S. Treasury prices pushed the two-year yield up by 5 basis points to 3.61%, the highest level since the Fed's most recent rate cut in December. After Trump's comments on Hassett, short-term interest rate contracts reflected a reduced probability of two 25-basis-point rate cuts by the Fed this year. Meanwhile, the Treasury market continued to be affected by the employment data released a week ago for December, which prompted Wall Street banks that had previously predicted a Fed rate cut at its next meeting on January 28 to abandon that view. Morgan Inflation Economist predicted that despite the ongoing leadership transition at the Fed, further rate cuts are unlikely. John Fath, managing partner at BTG Pactual Asset Management in the U.S., said, "The previous trade was betting that whoever becomes the next Fed chair would be a dove. This trend has reversed in the past few days." (Jinshi)