The market is cautious but not panicking. Analysts say Jerome Powell is a solid choice for the Federal Reserve Chairman and there are expected to be two or three interest rate cuts this year.

After President Trump announced the nomination of former Fed Governor Kevin Warsh as the next Fed Chairman, Wall Street's overall reaction was calm. For Trump, who is known for creating policy uncertainties, the market's "calmness" itself is seen as a victory. Trump announced the nomination decision on Friday morning through social media and had threatened to carry out an "institutional change" at the Fed, criticizing current Chairman Powell for ignoring his demands for significant interest rate cuts to stimulate the economy. However, several portfolio managers stated that Warsh is unlikely to cater to Trump's will and will not significantly change the Fed's current policy stance. The market trend also reflected this cautious but non-panic sentiment. Following the announcement, the S&P 500 index fell about 0.4%, and the 10-year US Treasury yield slightly rose to 4.242%. Meanwhile, gold and silver, which had been rising steadily due to monetary policy uncertainties, experienced a sharp decline, with silver falling by over 25%. President and Chief Investment Strategist at Yardeni Research, Ed Yardeni, stated that Warsh is an "excellent candidate with a strong track record" and expects him to take a practical approach. Gibson Smith, founder of Smith Capital Investors, bluntly stated, "To think that Warsh would let Trump decide on interest rate policy is an insult to him." Warsh's policy stance is not seen as a single label on Wall Street. While he is generally regarded as a hawk during his time at the Fed, criticism of Powell in recent years has been interpreted by some observers as being more dovish, creating market discrepancies regarding his future policy direction. Idanna Appio, Fund Manager of First Eagle Global Income Fund, stated that the market generally views Warsh as one of the most hawkish candidates, but she disagrees, "I still expect two to three rate cuts this year under Warsh's leadership, which is not fundamentally different from other candidates." Warsh has long advocated for the Fed to maintain a smaller balance sheet and criticized quantitative easing policies for boosting asset prices without improving wage growth. Simeon Hyman, Head of Investment Strategy at ProShares, pointed out that if the future chairman both supports lowering short-term rates and opposes reducing long-term yields, it could lead to a further steepening of the yield curve. Anwiti Bahuguna, Global Co-Chief Investment Officer at Northern Trust Asset Management, believes that among the various candidates considered by Trump, Warsh may be the "most traditional and consensus-friendly" choice, particularly welcomed by the bond market. Analysts pointed out that Trump may have chosen a more easily acceptable candidate from Wall Street due to the uncertainty of confirmation. Recent attacks on Powell by Trump and related investigations by the Department of Justice have made policymakers uneasy, with Senator Thom Tillis even stating that he will not approve any candidates before the investigation is concluded. In addition, Trump's attempt to dismiss Fed Governor Lael Brainard's Supreme Court case has added uncertainty to the situation. Jake Schurmeier, Fund Manager at Harbor Capital Advisors, believes that Trump may hope to reduce resistance through nominating Warsh while sending a signal to maintain the independence of the Fed. However, he also sarcastically remarked, "Trump will likely start complaining about Warsh again in 12 months."