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Posted January 12, 2026 at 12:52 pm
News that the DOJ is investigating Fed Chair Jerome Powell shifted the odds in our prediction market as to who President Trump will nominate to lead the central bank next. Since Kevin Warsh is a former governor of the monetary policy institution, his probability dropped from 44% to 38% over the weekend, as he’s potentially seen as a fellow that may defend Fed independence and at times stand at conflict with the head of state. Participants may believe that the other Kevin, meanwhile, Hasset, who has never maintained a political appointment at the Fed and is more distant as Director of the National Economic Council, has a stronger chance of securing the spot in light of the perception that the commander in chief is looking to increasingly influence the organization’s decisions and could choose someone with a higher likelihood of considering his suggestions.
Tomorrow’s Consumer Price Index (CPI) report could come in significantly different than Wall Street’s projections because of adverse impacts from the government shutdown which influenced how shelter was measured. The component is the heaviest weighting in the pivotal economic indicator at north of 40% and how it’s handled in the upcoming print is a critical question that economists are carefully pondering. It’s absolutely that development that has estimates sitting all over the place, with the 41 professional forecasters surveyed in the monthly Reuters poll at a minimum of 2.5% and a maximum of 2.9%. This is rare for a gauge that is usually well telegraphed by prognosticators and has a narrower historical width amongst analysts. Meanwhile, our prediction market is expecting numbers around 2.7% for both headline and core. The “Yeses” at 2.7%, that profit off of a result of 2.8% or higher, are at $0.26 for the former and $0.43 for the latter.
Source for images: ForecastEx
Note: Prices are highest bids as of the morning of Jan. 12, 2026.
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This material is from IBKR Macroeconomics, an affiliate of Interactive Brokers LLC, and is being posted with its permission. The views expressed in this material are solely those of the author and/or IBKR Macroeconomics and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
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