The Fed chair has one job left
Sometime this week we will likely find out who will be the next Federal Reserve chair. Expect a big kneejerk reaction, especially if Taylor or Warsh is tapped to lead the Fed.
One overlooked angle is the handover.
No matter who is picked, Yellen will remain in charge at the Fed until February 1, 2018. That leaves only one meeting — Dec 13 — with a press conference scheduled afterwards.
The best thing she could do for the incoming Chairman would be to hike rates that day and remove some of the pressure on the new leader to act right away after he takes the helm. The worst thing you could do is hamstring a new governor with a tough choice right away.
That’s why I think it’s virtually guaranteed she hikes then if she isn’t reappointed. It’s also a way to ‘declare victory’ on the way out the door.
Meanwhile, if she is reappointed, she could opt to wait if economic data stumbles in the next six weeks.
What’s that worth? Maybe not much because a hike already 83% priced in but I think it’s a good reason to hold a bias towards USD longs.
Here are 5 reasons to appoint a new Federal Reserve Chairman.