Let's talk about this chart …
The betting markets on the next Fed Chair swung over the weekend, in favor of Rick Rieder.
Rieder runs Blackrock's huge bond investing business. And Trump has pulled his name back into the mix recently.
What makes the markets think Rieder could be the guy?
Perhaps a leak. But let's talk about why Rieder is a logical fit to lead the Trump Fed.
Trump has clearly found a very (and uniquely) effective Treasury Secretary in Scott Bessent. He's a markets guy who understands the plumbing, flows, global positioning, spreads, incentives, market psychology — and how to use his position to influence market direction and stability. And he has proven to use it all, very effectively, as leverage for geopolitical gain.
With that, we can see how Trump might want a markets guy — with Rieder's skillset and experience — to run the Fed.
And we already know that Rieder and Trump are on the same page.
Rieder's done plenty of media, where he's made it clear that he sees interest rates lower and faster (than the Fed is projecting).
He sees the neutral rate lower than the Fed sees it, because he thinks we're in a (disinflationary) "productivity revolution."
But here's where he aligns even more closely with Trump.
He understands that it's important to get consumer borrowing costs lower, not just the Fed's benchmark rate.
Rieder's focus is on the 10-year yield — the interest rate from which real-world borrowing is priced. He wants to see it between 3.5% and 4% and, importantly, stable.
And with that, an historically average spread between mortgage rates and the 10-year yield would bring mortgage rates down to the mid-5% area.
As we know, Trump has been focused on the housing affordability problem, and getting mortgage rates down (by activating Fannie and Freddie to buy mortgage bonds).
Likewise, Rieder framed housing as a priority in a podcast interview late last year.
He thinks getting mortgages in the mid-to-high 5% area would unlock housing, and unlock labor mobility, new home construction (and related jobs) and get the younger generation into home ownership.
He uses the same language as Trump, presenting home ownership as a key wealth builder for the country.
Now, from all of this, what key expectation should we have of a Rieder-led Fed?
This: He doesn't just want a lower 10-year yield, he wants it stable.
What does "stable" imply? It implies, as Fed Chair, he might be inclined to influence that stability with the Fed toolbox (like yield curve control — capping the 10-year yield).
That might be part of the explanation for the 10% rise in gold prices over the past seven days.
