The Trump administration is expanding its search for the next Chair of the Federal Reserve. Now, Rick Reider from Blackrock, David Zervos of Jefferies LLC, and Larry Lindsey, a former Fed Governor, are being considered. Both Reider and Zervos often appear on CNBC and other business news channels. Lindsey is also a regular face in these programs.

Potential Candidates

Other candidates include Kevin Hassett, who is the current White House national economic advisor, and Jim Bullard, the current Fed President. Michelle Bowman, Philip Jefferson, and Lorie Logan, all current Fed Governors, are also on the list. Logan is additionally the Dallas Fed President. Marc Summerlin, an economic advisor to George Bush, and Christopher Waller, a current Fed Governor, are in the running too. Kevin Warsh, a former Fed Governor and now an advisor to the Hoover Institution, rounds out the list of candidates. This search for the next Fed Chair is creating uncertainty and increasing market nerves. The latest inflation report from July 2025 shows a stubborn 3.1% CPI, while the unemployment rate has risen slightly to 4.2%. This situation complicates the Federal Reserve’s next steps from its current policy rate of 4.75%. Choosing the right leader is crucial for market trends. We can compare this situation to 2017 when a new chair was also being chosen. That period saw significant bond market volatility as various candidates were discussed in the media. We can look to that time to understand what might happen in the coming weeks.

Market Implications and Trading Strategies

For those trading derivatives, it’s important to monitor implied volatility. The CBOE Volatility Index (VIX) has been around 18, but we expect it to increase as speculation grows over who will be nominated. Buying VIX futures or call options could serve as a smart hedge against sudden market changes. The difference between hawkish and dovish candidates is key for interest rate markets. To prepare, we are considering options on SOFR futures. A hawkish choice could raise short-term rate expectations, while a dovish surprise could lower them. In that case, a long strangle might be a good strategy to benefit from a significant movement in either direction. This uncertainty also affects equities, especially sectors sensitive to interest rates like technology and real estate. We’re noticing increased options activity on ETFs like QQQ and XLRE. Traders might think about buying puts on these ETFs if they suspect a more aggressive, inflation-focused chair will be appointed. Create your live VT Markets account and start trading now.

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