On August 6, U.S. President Trump revealed to the media at the White House that he would nominate an interim Federal Reserve governor "in the next two or three days" to replace Adrianne Kugler, who left early.Commerce Secretary Howard Lutnik, Treasury Secretary Scott Bessent and Vice President Vance are all advisers involved in the process.

Under the Federal Reserve Act mechanism, vacancies in governing seats will give the president direct nomination power and will not need to immediately lock in a full 14-year term.Kugler's remaining term before leaving office is only five months. Direct nominations for a full term of directors require a lengthy Senate hearing, while transitional candidates can be accelerated through the "technical vacancy" clause.This shows that if Trump wants to place the "next Federal Reserve" chairman on the board, Kugler's vacant position is undoubtedly the best and only opportunity.

When reporters asked about the background of the interim candidates, Trump bluntly said that "there are probably three candidates on the list" and suggested that the candidates might be from Wall Street, and Treasury Secretary Scott Besant was not among the three.

In addition, Trump reiterated his belief that the "two Kevins"-former Federal Reserve Governor Kevin Walsh and National Economic Council Director Kevin Hassett-are the best candidates for the Federal Reserve chairmanship.Kalshi responded quickly in the forecast market: the probability of two candidates being nominated each soared to 35%, far exceeding the 15% approval rating of current director Waller.In terms of policy propositions, Washi endorsed his experience in responding to the financial crisis and called for radical interest rate cuts to ease the pressure on government debt; Hassett designed a combination of "tariffs + interest rate cuts" to try to simultaneously promote the return of manufacturing and the decline of capital costs-both are directed to Trump's core demands.

It is worth noting that the appointment of interim directors coincides with a crossroads of monetary policy.The July FOMC meeting had a dramatic scene: Trump appointed governors Waller and Bowman jointly voted against it, demanding an immediate interest rate cut by 25 basis points-the first time since 1993 that a dual director disagreed.

After the news was announced, the market traded dovish expectations in advance.The US dollar index fell to a three-week low in response. The money market bet that the probability of a rate cut in September jumped to 90%, and the easing rate was priced 2.3 times during the year.The risk reversal rate (RR) of options between the euro and the US dollar rose sharply, hedge funds intensively established long positions in the euro, and the spread between Germany and the United States on two-year government bonds narrowed by 20 basis points in one month.