Senator Thom Tillis has recently removed his opposition to Kevin Warsh’s nomination for Federal Reserve Chair following the Department of Justice's decision to cease its investigation into the current chair, Jerome Powell. This move has significantly shifted the confirmation market for Warsh’s nomination. The likelihood of confirmation by May 15 has surged to 90%, up from only 29% the previous day, indicating strong support from traders who are now optimistic about a smoother confirmation process.
The market for confirmation on May 1 remains largely unchanged, with minimal trading activity and a likelihood hovering around just 0.9%. In stark contrast, the market for May 15 shows a dramatic increase, with a notable 20-point rise reflecting a clearer pathway to confirmation. Traders are now accounting for an almost guaranteed confirmation by June 30, as indicated by the 98% probability in that timeframe, even if the initial May 15 deadline is missed.
Currently, there is a combined daily trading volume of $19,708 in USDC across the different confirmation markets. The order book details for the May 15 market reveal that it requires an investment of $1,590 to shift the price by five points, highlighting solid liquidity backing the revised odds.
Tillis has been a significant hurdle in the confirmation process for Warsh. With his change of stance, prompted by the DOJ’s clearance of Powell, the Senate is positioned for an expedited confirmation process. Presently, a position at 90 cents in the YES market will return $1 upon Warsh’s confirmation by May 15, yielding a return of 1.11 times the investment. This opportunity hinges on the expectation of swift Senate action over the coming weeks.
Investors should closely monitor the scheduling of the Senate Banking Committee and public statements from key senators whose votes could sway the outcome. These factors will be crucial in determining if the proposed timeline for confirmation by May 15 will be upheld.