Survey: Most respondents expect that Powell will retire before his term ends, which could either lead to him stepping down early or causing a huge shockwave.

The latest Markets Pulse survey shows that most respondents expect current Federal Reserve Chairman Jerome Powell to continue to lead the Fed until the end of his term. In a survey conducted on July 17-18, the majority of the 146 individuals interviewed believed that Powell would not leave the Federal Reserve before his term ends in 2026. It is reported that his term will end in May. This result indicates that almost no one believes that President Donald Trump will follow through on his threat to dismiss Powell. In recent weeks, Trump has been criticizing the Fed's decision to hold off on interest rate cuts almost daily, and has repeatedly mentioned firing Powell. This week, the markets got a taste of what an early departure by Powell would feel like. Reports on Wednesday suggested that Trump might immediately fire Powell, causing a brief disturbance in assets from stocks to bonds and the dollar, but a few hours later, President Trump announced that he would postpone this decision. Barclays forex strategist Skylar Montgomery Koning stated that the market clearly isn't ready for the scenario in which the Fed chair is ousted. How will the market react? There is a viewpoint that if Powell were to step down early, it could lead to a legal dispute, possibly ending up in the Supreme Court. Additionally, there are opinions that the possibility of Powell being fired could result in market volatility. Strategists at Deutsche Bank anticipate that if Powell were to step down early, the yield on 30-year US Treasuries could rise by more than 40 basis points, while the dollar's yield could drop by around 4% to 6%, which could be unprecedented. Many respondents also agree with this view, stating that long-term US Treasuries and the dollar would suffer the most after Powell's dismissal. Favorite candidates In addition, the latest survey asked respondents who they believe is most likely to replace Powell. Respondents indicated that Federal Reserve Governor Waller is the top choice, followed closely by Treasury Secretary Besen. Waller advocated for a rate cut this month to support the job market, indicating that he may vote against keeping rates unchanged if his colleagues do so at the July meeting. Although the role of Federal Reserve Chairman is crucial, interest rates cannot be controlled by the Chairman alone. Any policy adjustment must be approved by a majority of members of the Federal Open Market Committee (FOMC). Peter Vassallo, a portfolio manager at BNP Paribas Asset Management, pointed out that the FOMC could be a "stabilizing force." This article was reprinted from "Cai Lian Society," edited by GMTEight: Xu Wenqiang.