BlackRock's Rieder Emerges as Fed Chair Frontrunner, Traders Boost Dovish Bets

Bond futures traders are increasing bets on Federal Reserve policy turning dovish as BlackRock CIO Rick Rieder gains momentum to replace Jerome Powell as Fed chair. Prediction market Kalshi shows Rieder with 48% odds, ahead of former Fed Governor Kevin Warsh at 31%, driven by reported White House favor and Trump's recent "very impressive" comment. SOFR and federal funds rate futures show accelerated inflows into positions benefiting from steeper rate cuts. Trading volumes hit records in July-August federal funds spreads and June-December SOFR spreads. Analysts note Rieder's market-oriented approach historically favored more aggressive cuts, with Evercore ISI estimating he could support three cuts this year. Current swaps price under two 2026 cuts, but options markets show positions targeting rates as low as 1.5% by year-end.