The conventional wisdom had long been that it would be one of the “two Kevins.” At least, that was the prevailing impression in much of Wall Street and Washington when it came to President Donald Trump’s choice for the next chair of the Federal Reserve.

Trump had for months hinted that he wanted to appoint Treasury Secretary Scott Bessent to the role, but Bessent continued to turn down the offer.

That left Kevin A. Hassett, a longtime Trump loyalist and his economic adviser, and Kevin M. Warsh, a former Federal Reserve governor who came close to landing the job during Trump’s first term, as the leading contenders to succeed Jerome H. Powell in May.

The decision centers on whom Trump believes would be most capable of delivering a significant reduction in borrowing costs — an objective he repeatedly failed to extract from the Fed under Powell. Trump, who elevated Powell to the chairmanship in 2017, appears to remain haunted by that decision and has made clear that this time he wants someone more receptive to his guidance.

That requirement, however, creates a credibility problem for whoever is chosen — one that is difficult to escape. A chair perceived as being beholden to the US president risks undermining public confidence that the Federal Reserve makes decisions in the interest of the economy rather than the White House. And if that confidence erodes, borrowing costs could rise instead of fall, contrary to what the president wants.

“Anyone who gets the job is damaged goods,” said Andy Laperriere, head of US policy research at Piper Sandler.

Laperriere added: “Either you’re the person who delivers what the president wants, which won’t look great in the history books, or you’re the person who doesn’t deliver what the president wants, and then he’s likely to turn on you.”

A race toward the finish line

Until a few weeks ago, Hassett, director of the National Economic Council at the White House, was seen as the frontrunner for the role.

But Trump’s announcement this month that he would wait a bit longer before making a final decision added more drama to the prolonged “audition” process. His praise for Warsh last week following a meeting between the two confirmed that the race is far from settled.

Trump is scheduled to meet Wednesday afternoon with Christopher J. Waller, a Federal Reserve governor he appointed in 2020. Waller, who previously served as chief economist at the St. Louis Fed before moving to Washington, is widely viewed as a strong defender of the institution’s independence. That trait makes him a favorite on Wall Street, but at the same time reduces his chances of securing the job. In a moderated discussion Wednesday morning, Waller said there remains room for the central bank to cut interest rates given that the labor market is “quite weak,” but added that there is “no urgency” to do so.

Recent weeks have put Hassett on the defensive, as he has been forced to address growing concerns about his closeness to the president. In an interview with CBS News on Sunday, Hassett, who holds a PhD in economics, said he would listen to Trump’s views on interest rates, but that the president “would have no weight” in decision-making.

Critics argue that Hassett’s close relationship with Trump creates a perception problem that is difficult to overcome. They point to the rise in long-term US Treasury yields since Hassett emerged as the leading candidate in late November as a sign of Wall Street unease. Yields rise when prices fall, indicating weaker investor appetite for holding bonds.

As that narrative has taken hold, Warsh has begun to attract support from influential voices, including JPMorgan Chase CEO Jamie Dimon, who said at a private event last week that Warsh would be a “great chair,” while stressing his respect for both Kevins.

Warsh, who served as an economic adviser to former President George W. Bush and has deep ties to Wall Street, nonetheless faces his own challenges in securing the position.

His call for lower interest rates is relatively recent. As recently as last year, he was warning about a resurgence of inflation and criticized the central bank for what he described as “stimulating” the economy by signaling rate cuts.

That caution reflected Warsh’s views during his tenure as a Fed governor from 2006 to 2011. Even at the height of the global financial crisis, he repeatedly raised concerns about inflation. His opposition to the Fed’s efforts at the time to support the economy through trillions of dollars in government bond purchases ultimately led to his resignation.

Warsh has previously described the Fed’s independence as “precious.” Since then, he has linked rate cuts to a reduction in the central bank’s balance sheet, arguing that shrinking the Fed’s footprint in financial markets — a move likely to push up long-term borrowing costs — would give policymakers room to cut short-term rates. That approach, however, may not be enough to satisfy Trump.

“It really is a no-win scenario for those involved,” said Gennadiy Goldberg, head of US rates strategy at TD Securities. “Either you have credibility concerns, or you get someone more credible and less loyal.”

White House spokesman Kush Desai said in a statement that Trump is “committed to nominating the best and most qualified person to reverse the economic disaster left by Biden.”

A divided Federal Reserve

The next chair is also likely to face resistance from within the Federal Reserve itself. Interest rate decisions have already become deeply divided, reflecting the complexity of the economic backdrop.

Any attempt to push rates lower than economic conditions warrant would likely encounter opposition from other members of the Federal Open Market Committee, which consists of seven governors, the president of the New York Fed, and four of the remaining twelve regional Fed presidents on a rotating basis.

Blake Gwinn, head of US rates strategy at RBC Capital Markets, said he expects more fragmented votes going forward, including the possibility that the chair could find himself in the minority.

“A new chair can’t go into his first meeting and not dissent if the vote is to hold rates steady,” Gwinn said. “And if he votes with the majority to keep rates unchanged, Trump will go crazy.”

That dynamic could complicate the Fed’s ability to clearly communicate its policy intentions and could ultimately backfire on the president himself, Gwinn added.

“If we get into next year with him forcing rate cuts, the irony is that he may see all the interest rates he cares about go higher,” he said.

The next test

Rising concerns about the Fed’s future have not gone unnoticed by the administration. On Tuesday, Bessent praised both Kevins, saying each was “highly qualified.”

“The idea that people don’t have independence and can’t make decisions for themselves is wrong,” Bessent told Fox Business. He added, however, that what the next chair needs is an “open mind,” particularly toward the idea that “growth does not create inflation.”

Such reassurances may have been enough to calm nerves during Trump’s first term. But his aggressive efforts to pressure the Fed since returning to the White House — including an attempt to remove one governor and his statement that he “would like” to fire Powell — have heightened concerns about how far he might go to exert control over the institution.

The Supreme Court is set to consider in January whether Trump can remove Lisa D. Cook, the governor he has placed in his crosshairs. Legal experts warn that the outcome of the case could have far-reaching implications for the Fed’s ability to operate independently.

Powell, for his part, has so far sought to ignore the president’s attacks, repeatedly saying he is focused on doing his job. That has raised expectations about how the next Fed chair will handle a barrage of criticism from Trump, according to Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management.

“Will the next chair be as even-keeled as Chair Powell, able to brush off criticism and make decisions in the best interest of the economy and the public?” Zentner asked. “That is the real test of a Fed chair — not the ability to please the president.”

US stock indexes rose during Friday’s trading, supported by a rebound in the technology sector, particularly a number of stocks linked to artificial intelligence companies.

Oracle shares advanced after the company joined a joint venture to manage TikTok’s operations in the United States, following the sale of the Chinese app’s US business.

Meanwhile, New York Federal Reserve President John Williams said that “technical factors” may have negatively affected the accuracy of November inflation data, leading the headline index to come in below its underlying trend.

“As a result, I think the data were distorted in some categories, which pushed the consumer price index lower, perhaps by about a tenth of a percentage point or so,” he said.

He stressed that it is difficult to be certain, but noted that December inflation data are expected to be more accurate.

In market trading, the Dow Jones Industrial Average was up 0.5%, or 248 points, at 48,200 as of 14:55 GMT. The broader S&P 500 rose 0.7%, or 47 points, to 6,822, while the Nasdaq Composite gained 0.9%, or 222 points, to 23,225.

Palladium prices declined during Friday’s trading, attempting to pause after technical buying that lifted most precious metals, including silver, which recently reached record levels, amid ongoing uncertainty over US Federal Reserve policy.

Daily price movements in palladium are influenced by the same factors that guide overall performance across the precious metals complex, most notably US interest rate expectations, the strength of the dollar, and investor risk appetite.

These developments carry particular importance because palladium, like gold and silver, is globally priced. When expectations tilt toward interest rate cuts or a weaker dollar, non-yielding assets typically benefit, while heightened economic data risks can prompt short-term risk-reduction moves in metals markets.

Reuters also highlighted that delays or gaps in US economic data collection, resulting from the US government shutdown, add further complexity to the economic outlook and introduce an additional layer of uncertainty for traders when positioning their investments.

Key demand headline for palladium: Europe rethinks internal combustion engines by 2035

One of the most significant new catalysts shaping the medium-term demand narrative for palladium emerged on December 16, amid signals that the European Commission may soften its stance on banning new internal combustion engine vehicles by 2035.

Reuters reported that the European Commission is preparing to roll back the current plan by allowing the continued sale of some vehicles that are not fully electric, under strong pressure from major member states and the automotive industry. Under the proposal cited by the agency, the emissions reduction target would be revised from a 100% cut to 90% by 2035 compared with 2021 levels, potentially extending the lifespan of plug-in hybrids and range-extender vehicles.

In a separate report, Reuters noted that the European Commission is also considering a compensation mechanism that could allow internal combustion engine vehicles to continue being sold after 2035, through measures that include alternative fuels and accounting for green steel.

Why does this policy shift matter for palladium price expectations?

Palladium is closely tied to internal combustion engines due to its use in catalytic converters that reduce harmful emissions in gasoline engines. As a result, extending the life of hybrid vehicles and internal combustion engines in Europe — if legally approved — could slow the erosion of palladium’s core demand base.

Reuters quoted a commodities strategist at WisdomTree as saying that this policy shift is “likely to be supportive for internal combustion engine vehicles,” which rely on platinum and palladium.

In short, even modest adjustments to the expected timeline for the decline of internal combustion engines can feed through to palladium’s future demand curve, influencing speculative positioning and longer-term price expectations.

Supply and balance: the concept of “deficit” changes depending on investment demand

Alongside demand developments, the palladium market is also responding to supply-demand balance signals, particularly those issued by Russia’s Norilsk Nickel (Nornickel), the world’s largest palladium producer.

According to a December 16 analytical note published by FXStreet, citing Commerzbank commodities analyst Carsten Fritsch, Nornickel’s updated outlook can be summarized as follows:

For 2025, Nornickel expects the palladium market to be balanced when investment demand is excluded, but to show a deficit of about 200,000 ounces when investment demand is included.

For 2026, excluding investment demand, the company expects a deficit of 100,000 ounces.

Mining.com, citing Reuters reports, reaffirmed the same figures: balance in 2025 without investment demand, a 200,000-ounce deficit when it is included, and a 100,000-ounce deficit in 2026 excluding investment activity.

Investor takeaway

When reading headlines about a “deficit in the palladium market,” attention should be paid to the fine print: does the deficit include investment demand or not?

In a small and concentrated market like palladium, shifts in ETF flows or physical investment demand can materially alter the supply-demand balance — and, in turn, price sentiment.

This investment dimension was also highlighted in broader commentary on precious metals. A daily report from the India Bullion and Jewellers Association dated December 16 noted that palladium has risen by about 25% since the start of the rally, alongside strong gains in silver and platinum, illustrating how momentum has rotated from gold into the wider precious metals complex.

Outlook and forward view: where is palladium headed in 2026?

Strong palladium gains during 2025 have prompted analysts to reassess scenarios for 2026. The market currently stands at the intersection of two competing narratives:

Structural support factors include tight supply, concentrated production, and political developments that could extend demand for internal combustion engines and hybrid vehicles.

Structural headwinds include the long-term shift toward fully electric vehicles and substitution risks, which may cap upside for a metal heavily dependent on gasoline exhaust catalysts.

The most widely cited forecasts as of mid-December 2025 include:

Morgan Stanley expects palladium prices to reach $1,325 per ounce in 2026, alongside higher forecasts for platinum, driven by structural imbalances and divergent demand drivers.

Heraeus Precious Metals projected a wide 2026 palladium price range between $950 and $1,500 per ounce in a December 8, 2025 report, warning of a potential expansion in surplus if demand for catalytic converters weakens as electric vehicle penetration rises.

The World Platinum Investment Council expects a slight deficit in the palladium market during 2025, followed by a shift to a modest surplus in 2026 under its base-case scenario.

A Reuters survey showed the average 2026 forecast at $1,262.50 per ounce, up from $1,100 in the previous survey, reflecting a change in sentiment after the strong 2025 rally.

During US trading hours on Friday, March palladium futures were down 0.4% at $1,768 per ounce as of 14:34 GMT.

Bitcoin was largely steady on Friday near the $87,000 level, after moving within tight ranges earlier in the week, as investors assessed US inflation data that came in weaker than expected, strengthening expectations of future interest rate cuts by the Federal Reserve.

The world’s largest cryptocurrency was trading up 0.6% at $87,121.6 as of 01:52 AM US Eastern Time (06:52 GMT).

Bitcoin is on track to post a weekly decline of about 4%, extending a period of sideways movement following strong gains earlier this year. The cryptocurrency spent most of the past week confined within a narrow price range.

Bitcoin remains range-bound

Bitcoin has repeatedly failed this month to stage a sustained rebound above the $90,000 level, which is considered a key psychological resistance.

Weak liquidity, which is typical of late-December trading, has also reinforced investor caution and limited the durability of short-term rallies. Trading volumes remained low, leaving prices more sensitive to modest capital flows and encouraging continued range-bound trading.

Weaker US consumer price index boosts easing bets

The world’s largest cryptocurrency showed a limited immediate reaction to US consumer price data released on Thursday, which came in weaker than expected, with annual inflation at 2.7%.

Thursday’s data reinforced market bets that the Federal Reserve could move to cut interest rates at a faster pace during 2026. Interest rate futures now reflect rising expectations toward monetary easing in early 2026, as easing price pressures reduce constraints on policymakers.

Lower interest rates typically support high-risk assets by reducing the opportunity cost of holding non-yielding investments such as Bitcoin.

In the absence of major cryptocurrency-specific developments to lift sentiment, inflation data alone was not enough to drive a decisive rally in Bitcoin.

New York Stock Exchange owner plans investment in crypto payments firm MoonPay – Bloomberg

Bloomberg reported, citing people familiar with the matter, that Intercontinental Exchange Inc, listed on the New York Stock Exchange under the ticker (NYSE: ICE) and the owner of the NYSE, is in talks to invest in crypto payments firm MoonPay as part of a new funding round.

According to the report, New York-based MoonPay is close to completing the fundraising process and is targeting a valuation of around $5 billion.

These talks highlight growing Wall Street interest in digital assets amid a more favorable US political environment under President Donald Trump.

Cryptocurrency prices today: altcoins muted as they track Bitcoin

Most alternative cryptocurrencies posted limited or near-flat moves on Friday.

Ethereum, the world’s second-largest cryptocurrency, rose 1.8% to $2,926.92.

By contrast, XRP, the third-largest cryptocurrency globally, was largely unchanged at $1.84.