Will the Market Test Warsh

The report examines the historical tendency for financial markets to experience volatility when a new Fed chair takes office, specifically looking ahead to Kevin Warsh's appointment in May 2026.

Key Takeaways

• 1.Financial markets historically 'test' new Federal Reserve chairs with significant drawdowns, averaging 5% in the first month and 13% by month three.
• 2.The 'market test' is often a response to the new chair's attempt to establish hawkish credibility by raising rates early in their term.
• 3.Kevin Warsh is set to take office on May 15, 2026, amid market debate over a potential 'testing' rate hike.

Table of Contents

• Macro Picture - Chart Story
• WILL THE MARKET "TEST" WARSH?
• What do we mean by a market "test"?
• The market certainly tested Powell early on...
• But it isn't just the stock market that can test a new Fed chair
• Why do Fed chairs start out hawkish?
• Disclaimer

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