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Home>UPDATE: Stock market in wait-and-see mode as Trump mulls Fed chair nominee

UPDATE: Stock market in wait-and-see mode as Trump mulls Fed chair nominee

UPDATE: Stock market in wait-and-see mode as Trump mulls Fed chair nominee

10/05/2017

By Anora M. Gaudiano, MarketWatch

Yellen, Warsh, Powell and Cohn seen as front-runners

Stock-market investors are largely shrugging off a possible change in leadership at the Federal Reserve, but analysts see potential for a jolt when President Donald Trump ends the guessing game and puts forward his nominee.

In a note to investors, Bank of America Merrill Lynch economists Michelle Meyer and Alexander Lin, said that until there is clarity about Fed leadership, "we suspect that market participants will be hesitant to take a strong position on medium term monetary policy."

The S&P 500 (http://www.marketwatch.com/story/us-stocks-set-to-catch-their-breath-after-record-run-but-tesla-jumps-2017-10-04) advanced further into record territory Wednesday. Treasury yields have been on the rise, with the 10-year note hovering above 2.3% (http://www.marketwatch.com/story/treasury-yields-retreat-as-global-stocks-turn-lower-dollar-softens-2017-10-04).

Janet Yellen's term as chairwoman of the Fed expires in February. While Trump hasn't ruled out reappointing her, (http://www.marketwatch.com/story/trump-says-he-likes-and-respects-yellen-but-hasnt-made-up-his-mind-yet-about-top-fed-job-2017-09-14) other candidates are seen as more likely to get the nod. Jerome Powell, a Fed governor, and Kevin Warsh, a former governor, are seen as possible front-runners. Top White House economic adviser Gary Cohn is also seen as a candidate, though his relationship with Trump is said to have cooled.

Trump on Sept. 29 said he has had four meetings regarding the vacancy and that he would make a decision "in the next two to three weeks." (http://www.marketwatch.com/story/trump-says-he-will-make-a-decision-on-top-fed-job-in-2-to-3-weeks-2017-09-29)

The Merrill economists offered a guide to how they think each of the four individuals would conduct Fed's policy.

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