Recently, there has been a noticeable shift in the sentiment of Wall Street traders. January 17th became a critical turning point—after news broke that Trump might be a candidate to succeed Powell and hinted that the current Chair of the National Economic Council, Hassett, would not be activated, the U.S. bond market declined, with the two-year yield jumping by 5 basis points to 3.61%, reaching the highest point since the Fed's last rate cut in December.

This news directly impacted traders' expectations of the Federal Reserve. Previously, everyone bet that whoever took office would adopt a dovish policy stance. But in recent days, this logic has been overturned. Based on the reaction of short-term interest rate contracts, the market's probability of two 25 basis point rate cuts this year has significantly decreased. Coupled with ongoing concerns following the December employment data release, major Wall Street firms that had previously bet on a rate cut at the January 28 meeting have all changed their tune.

J.P. Morgan's inflation economics team has provided a new assessment: even if there is a change in the Fed leadership, the likelihood of further rate cuts is very small. John Fath, a partner at BTG Pactual Asset Management in the US, candidly stated, "The trading logic has shifted from 'someone will be dovish' to 'it might even be hawkish,' and this reversal has happened in the past few days."