GOAT10X

💱 2026: The Year the Fed Turns Into a New Institution

Next year’s market story is the arrival of a new Federal Reserve. If Trump selects Kevin Hassett as Chair, policy shifts toward an openly growth first stance and away from Powell’s caution.

❓ Who Hassett Is

Hassett is the leading candidate with strong odds. He argues that inflation is essentially defeated and that current real rates are held up for political reasons. All year he pushed the same message that rates should be much lower. On any hawkish to dovish scale he sits near the most dovish end.

The expected sequence is simple. In January he replaces Miran as Governor. In May he becomes Chair. Powell then steps down from the Board as every exiting Chair has done which allows Trump to bring in Warsh.

⚡️ The New Committee

If Powell resigns, Hassett gains a firm dovish core supported by a large group of officials who can be convinced. Only two members stand as consistent hawks.

If Powell refuses to resign, the outcome turns bearish because he becomes a shadow leader who blocks new appointments and splits loyalty across the committee.

🕯 Market Reaction

First comes immediate optimism once Hassett is nominated and confirmed.
Then concern grows if Powell remains silent for several weeks.
A strong rally follows the moment Powell confirms his exit.
Volatility returns ahead of the first meeting under Hassett in June 2026.

The risk is a divided committee. The Chair has no special tie breaking power and repeated split votes would undermine trust.

📉 Rates And Repricing

The official dot plot hides the real stance. The true median of voting members for late 2026 is close to three point one percent. With Hassett and Warsh in place the center moves toward two point six percent.

The market sits near three point zero two percent which leaves meaningful room for the short end to fall. If the productivity boom continues to cool inflation, the pressure for deeper cuts increases.

🌐 Asset Impact

Two year yields should drop as easing becomes the base case while ten year yields stay higher due to stronger growth.
Equities benefit from lower real discount rates and a revival in growth valuations.
Gold strengthens in any environment where the Fed favors expansion over strict inflation control.
Bitcoin eventually reacts positively if policy turns clearly supportive despite recent fragile behavior.

🔗 The Tealbook Factor

The research staff drives the baseline for every FOMC debate. A shift from a Keynesian outlook to a supply side outlook would produce more disinflationary forecasts which gives moderates room to back stronger cuts.

The result is clear. The year 2026 is set to deliver a true policy regime change. Markets only partly reflect this shift even though the incoming leadership points to a much more forceful turn toward lower rates.