The market is cautious but not panicking. Analyst: Wosh is a steady candidate for Federal Reserve Chair. Expect two to three rate cuts this year.

Since President Trump announced the nomination of former Federal Reserve Board member Kevin. Wash as the next Federal Reserve Chair, Wall Street’s reaction has been generally calm. For Trump, who is known for creating policy uncertainty, a “calm” market is seen as a victory in itself.

On Friday morning, Trump announced his nomination via social media and had previously threatened to undertake a “systemic overhaul” of the Fed, criticizing current Chair Powell for ignoring his significant rate cuts to stimulate the economy. However, several portfolio managers stated that Wash is unlikely to cater to Trump’s wishes or significantly alter the Fed’s current policy stance.

Market movements also reflect this cautious but not panicked sentiment. After the announcement, the S&P 500 index fell about 0.4%, and the 10-year U.S. Treasury yield slightly increased to 4.242%. Meanwhile, gold and silver, which had been rising due to monetary policy uncertainty, experienced sharp declines, with silver dropping over 25%.

Ed Yardeni, President and Chief Investment Strategist of Yardeni Research, described Wash as a “well-qualified, steady candidate” and expects him to take a pragmatic approach. Gibson Smith, founder of Smith Capital Investors, bluntly stated, “Thinking Wash will let Trump decide interest rate policy is an insult to him.”

Wash’s policy stance is not viewed as a single label on Wall Street. During his tenure at the Fed, he was generally seen as hawkish, but recent criticisms of Powell have been interpreted by some as dovish, creating divergence in market expectations about his future policy orientation.

Idanna Appio, manager of the First Eagle Global Income Fund, said that the market generally considers Wash one of the most hawkish candidates, but she disagrees, stating, “I still expect two to three rate cuts this year under Wash’s leadership, which is no different in essence from other candidates.”

Wash has long advocated for the Fed to maintain a smaller balance sheet and has criticized quantitative easing for inflating asset prices without improving wage growth. Simeon Hyman, Chief Strategy Officer at ProShares, pointed out that if future chairs support lowering short-term rates while opposing lowering long-term yields, it could lead to an even steeper yield curve.

Anwiti Bahuguna, Co-Chief Investment Officer of Northern Trust Asset Management, believes that among the many candidates Trump considered, Wash might be the “most traditional and consensus-driven” choice, especially favored by the bond market.

Analysts note that Trump may have chosen a candidate more acceptable to Wall Street due to uncertainties surrounding the nomination confirmation. Recent attacks on Powell and related Department of Justice investigations have unsettled policymakers, with Senator Thom Tillis even stating that no candidate will be approved until the investigation concludes. Additionally, Trump’s attempt to remove Fed Board member Lisa Cook through a Supreme Court case adds further uncertainty.

Jake Schurmeier, Fund Manager at Harbor Capital Advisors, believes Trump may want to lower resistance by nominating Wash while signaling a desire to maintain Fed independence. However, he also sarcastically remarked, “It’s very likely that Trump will start complaining about Wash again in 12 months.”