Warsh Chosen as Fed Chair, Dollar Climbs The Most Since May – US Market Wrap

The dollar’s biggest rally since May accelerated a sharp selloff in precious metals after Trump named Kevin Warsh as his pick for Federal Reserve chair, a choice seen as less supportive of deep rate cuts and more focused on inflation. Stocks fell, while bonds were mixed.

As the dollar strengthened against all major currencies, it pared losses for January. Long-dated Treasuries underperformed. Money markets showed little reaction to the announcement, with traders even slightly increasing bets on two Fed rate cuts in 2026. Declines in commodity and technology shares weighed on the S&P 500, though the index still recorded its strongest monthly gain since October.

If confirmed by the Senate, the former Fed governor would succeed Jerome Powell when his term ends in May. Warsh aligned himself with Trump in 2025 by publicly arguing for lower interest rates, a shift from his long-standing reputation as an inflation hawk. Speaking to reporters on Friday, Trump said he had not asked Warsh to commit to rate cuts.

The S&P 500 fell 0.4%. The yield on two-year Treasuries slipped three basis points to 3.53%, while 30-Yr yields rose four basis points to 4.89%. The dollar climbed 0.9%. Bitcoin posted its longest run of monthly losses in about seven years.

Gold suffered its steepest drop in decades, while silver plunged, reversing a blistering rally to record highs.