Trump’s team is broadening its search for a new Federal Reserve chair, with the candidate list now including figures like former St. Louis Fed President James Bullard and former Bush adviser Marc Sumerlin. The total number of candidates has reached approximately ten, according to the Wall Street Journal.
Other prominent candidates for the role are NEC Director Kevin Hassett, current Fed Governor Christopher Waller, and former Fed Governor Kevin Warsh. Treasury Secretary Scott Bessent is guiding the search, planning to conduct preliminary interviews before presenting a final shortlist to President Trump.
Potential Inclusion Of James Bullard
The potential inclusion of James Bullard as a candidate might suggest Trump’s interest in a more forward-thinking figure at the Fed. However, if the aim is to drastically lower interest rates, Bullard’s economic stance might not align with this objective.
There is a perception that Trump wants to lower rates despite potential inflation risks, possibly believing he can manage price hikes by other means. This search process could be seen as a formality, potentially leading to the appointment of someone who closely aligns with Trump’s economic preferences.
The expanding list of candidates for the next Fed Chair is introducing significant uncertainty into the market. With names ranging from the more mainstream to the unpredictable, we are finding it difficult to price the future path of interest rates. This makes navigating the next few weeks particularly challenging for anyone with exposure to rate-sensitive assets.
We are seeing this uncertainty reflected directly in bond market volatility. The MOVE index, which tracks expected swings in Treasury yields, has climbed to 125, its highest level since the banking jitters we saw back in early 2024. This shows that traders are actively buying protection against sharp, unexpected moves in interest rates.
Range Of Candidates
The candidates themselves present a wide range of possibilities. A figure like Christopher Waller would likely represent policy continuity, while someone like Kevin Warsh could signal a strong desire for lower rates. The inclusion of James Bullard is a wildcard, as he has shifted his views in the past, making his potential leadership difficult to handicap.
This situation is complicated by recent economic data. The July 2025 CPI report showed inflation remains sticky at 3.1%, well above the Fed’s target. The administration’s apparent push for rate cuts is therefore running directly against the current inflation picture, creating a major conflict for monetary policy.
We remember a similar dynamic from the 2018-2019 period, when the White House openly criticized the Fed for raising interest rates. That experience suggests we should be prepared for policy decisions that may prioritize political goals over traditional economic indicators. The market has not forgotten the inflation surge of 2021-2022 and fears a repeat if the Fed cuts rates prematurely.
For derivative traders, this environment suggests owning volatility is a prudent strategy. Buying options that profit from large price swings, such as straddles on interest rate futures, could be an effective way to position for a surprise appointment. The cost of these options has risen, but the potential for a sharp repricing remains high.
The front end of the yield curve, particularly the 2-year Treasury note, will be the most sensitive area to watch. Its yield is currently hovering around 4.5%, reflecting expectations of a “higher for longer” rate path. A nominee perceived as dovish would cause that yield to fall dramatically, and traders should monitor the news flow closely for any hints.
Ultimately, the search process may be more about political theater than a genuine exploration of candidates. The final choice is likely to be someone who will align with the administration’s goals for lower interest rates, regardless of the inflationary consequences. We should position ourselves for a Fed that could become far more accommodative in the near future.
