Wall Street’s 'Bond King' or the 'Two Kevins'? The High-Stakes Race for the Fed Throne

What Happened

Imagine the Federal Reserve chair search as a high-stakes season finale of The Apprentice. For months, the financial world has been guessing who will replace Jerome Powell at the helm of the central bank, and the leaderboard just took a dramatic turn.

Rick Rieder, the fixed-income chief at BlackRock and a legendary figure in the bond market, has suddenly become the betting favorite. According to the prediction market Kalshi, Rieder now holds a 48% chance of landing the job. This is a massive leap, especially considering that just a week ago, former Fed Governor Kevin Warsh was the clear frontrunner. Warsh has now slipped to second place with a 31% chance.

Why the sudden vibe shift? It all comes down to a few choice words from the top. During an interview at the World Economic Forum, Donald Trump called Rieder "very impressive." Combine that with reports that White House officials are fans of the Wall Street veteran, and the betting markets went into a frenzy. However, as any seasoned political observer knows, a compliment from the President can be as fleeting as a summer breeze.

Quick Take

• The Frontrunner: Rick Rieder (BlackRock) currently leads with 48% odds on Kalshi.
• The Challengers: "The Two Kevins"—Kevin Warsh (31%) and Kevin Hassett (NEC Director)—remain heavy favorites among traditional analysts.
• The Loyalty Factor: Critics argue Rieder lacks the "loyalist" credentials the President typically prizes.
• The Wild Card: Experts warn that Trump could still pick a "mystery candidate" not currently on the radar.

Why It Matters

The person who runs the Federal Reserve holds the steering wheel of the global economy. They decide whether to raise or lower interest rates, which dictates everything from your mortgage rate to the price of a gallon of milk.

Wall Street loves Rieder because he speaks their language. He manages trillions of dollars at BlackRock and understands the plumbing of the financial system better than almost anyone. But there is a catch: The "Loyalty Gap." Analysts like Tobin Marcus of Wolfe Research are skeptical that Rieder fits the administration's mold.

As Marcus noted in a recent memo: "Just last week, Trump was continuing to strongly emphasize 'loyalty' as a criterion, which is an obstacle for Rieder... If this is still the President's mindset, that seems like an obvious problem for Rieder, who is in no way a loyalist."

Then there is the "Hassett Factor." While some traders think Kevin Hassett is out of the running because Trump mentioned he'd "miss him" at the National Economic Council, others see that as a classic head-fake. Former Fed Vice Chair Roger Ferguson isn't buying the Rieder hype either, stating he still believes the choice will ultimately come down to "one of the Kevins."

The Bottom Line

While the betting markets are currently all-in on a BlackRock takeover of the Fed, the reality is that in this administration, the only poll that matters is an audience of one.