The sell-off of US bonds is a falsehood, the Fed's leadership change is real: a battle over the dollar and confidence

2026-01-20 13:54:45

U.S. Treasury Secretary Yellen provided two key pieces of information at Davos. She first dismissed the notion that Europe might sell U.S. Treasuries, calling it a “completely illogical” false narrative. Secondly, she revealed that the appointment of the new Federal Reserve Chair could be announced as early as next week, with four candidates currently in the running.

Regarding the rumors of Europe selling U.S. debt, Yellen was firm. She stated that Europe “has not had such discussions at all,” and strongly opposed this view. The direct purpose of this statement is to stabilize global market confidence in the outlook for demand for U.S. Treasuries, a core asset.

The change in the Federal Reserve Chair is another major event. Yellen confirmed that President Trump might announce his decision as early as next week. The four candidates include Rick Reeder from BlackRock, Kevin Hasset, Director of the National Economic Council, Christopher Waller, a Federal Reserve Board member, and former Board member Kevin Warsh.

Among them, the frontrunner Hasset’s situation has become somewhat delicate. Trump has publicly expressed a preference for Hasset to remain in his current position, reflecting White House concerns about losing an important voice on economic policy. Reeder from BlackRock is believed to face fewer obstacles in the Senate confirmation process, which is a significant advantage at this moment.

Wall Street is closely watching this nomination. The market consensus is that the ability of the Federal Reserve Chair to combat inflation while resisting political interference is the cornerstone of global financial stability. If the new Chair is perceived by the market as overly politicized, it could trigger bond market volatility and put long-term pressure on the dollar.

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