Rumors have surfaced about Jerome Powell resigning as Chair of the Federal Reserve. Some suggest that Donald Trump plans to lower interest rates. However, these claims are viewed as unfounded and seem aimed at influencing Bitcoin trading. Currently, there is no proof to back these rumors. Powell has stated he will serve until his term ends in May 2026. Recent legal rulings also restrict Trump’s power to remove him. Federal Reserve officials suggest that interest rates will likely stay steady for the next meeting. These early-week rumors appear to be speculative attempts to impact pricing in sensitive markets. Although they are popular in social media and among retail commentators, they lack support from official sources. Powell’s term is confirmed to run until mid-2026, and the legal framework limits the ability to remove central bank appointees. This means it is unlikely there will be any major changes to the Fed in this administration or the next. Clarida has previously emphasized the importance of Fed independence. Any credible challenge to this independence would show up in Treasury futures immediately. However, this hasn’t occurred. The two-year note is trading within its average range, and options do not indicate increased volatility due to leadership uncertainty. Thus, we can treat these rumors as background noise for now. For those involved in rate-sensitive derivatives, clarity is found in the minutes and statements from the FOMC. Jefferson and Waller have both suggested that current inflation levels don’t support any immediate policy changes. With Powell still in charge and legal barriers to his removal in place, scenarios that would favor steepening the yield curve seem without foundation. What matters now is positioning for the next CPI release and how implied volatility shifts as we approach the Fed’s meeting. We’re seeing long-duration investment flows concentrated around the middle of the curve, while gamma has mostly remained flat across various rate expirations. Caution in the market has led to weaker collars and wings, indicating that participants do not expect sudden changes from leadership changes. This is significant and should be monitored closely. This week’s contracts suggest that carry is stable unless new dot projections prompt a repricing, which hasn’t occurred yet. As pricing continues to rely more on factual data than sensational headlines, we need to stay aware of the potential for discounted volatility linked to deeper rate hikes, but only when tied to credible indicators. Until that time, short flies and mid-curve volatility fades remain sensible strategies.

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