"Shadow Chair" effect emerges? Traders are betting heavily that the Federal Reserve will cut interest rates quickly after Powell steps down.

The Securities Times app has learned that US interest rate traders are betting that after Federal Reserve Chairman Powell's term ends in May 2026, the Federal Reserve will quickly shift to a more dovish monetary policy. The core assumption of this bet is that after President Trump appoints Powell's successor, the new Federal Reserve Chairman will cut interest rates at their first monetary policy meeting (expected to be in June 2026). The trading volume related to this bet hit a historic record on Monday and continued to expand on Tuesday.