CITIC Securities: Waller may eventually take over the Federal Reserve, potentially triggering a reversal trade in "independence"

Jinse Finance reported that a research report from CITIC Securities stated that the Trump administration is currently in the process of selecting the next Federal Reserve Chair. We believe the main competition is between Waller and Hassett. For Trump, it is a comparison between the "most suitable" and the "most obedient." At present, market probabilities show Hassett in the lead, but Trump has a high level of trust in Bessent. It is recommended to pay attention to the potential expectations gap that may arise if Bessent, who is committed to maintaining the Fed's independence, leads the interview process. In addition, given the precedent of the market "voting with its feet" and the resistance Trump encountered in the Senate when appointing Milan as a board member, we believe Hassett is unlikely to be elected, and Waller may ultimately prevail. This could trigger a "Fed loses independence" reversal trade: bullish for overall US dollar assets and bearish for gold, with the market possibly reducing expectations for rate cuts next year. If Hassett wins, we expect the market to experience a "muscle memory" reaction to the Fed losing its independence: bearish for overall US dollar assets, bullish for gold, and the market may raise expectations for rate cuts next year.