The Justice Department has dropped its investigation into Federal Reserve Chair Jerome Powell. This decision removes a significant obstacle to Kevin Warsh's confirmation as Fed Chair. Market sentiment strongly favors Warsh's confirmation by May 15, with the probability now at 78.5%, a substantial increase from 29% just a day prior.
The DOJ's decision allows the Senate to proceed with Warsh's confirmation process. The market for his confirmation by May 15 saw a significant jump in implied probability. Contracts for confirmation by June 30 are trading at 94.2% YES.
This development signals that traders anticipate a confirmation vote within the next two weeks. Senator Thom Tillis had previously stated he would block Warsh's confirmation until the investigation concluded. With the DOJ probe now closed, this stated reason for opposition is removed, potentially shifting Tillis's stance.
Trading volume for Warsh's confirmation markets has been active. The May 15 market shows concentrated positioning among traders, with a notable price spike following the DOJ announcement indicating strong conviction. The path to Warsh's confirmation by the May 15 deadline appears significantly clearer. Key upcoming catalysts include any official statements from Senator Tillis and the Senate Banking Committee scheduling a confirmation hearing.