'Hassett Effect' Impact Analysis: Fed Chair Nomination and U.S. Dollar Dynamics

This analysis is based on the Wall Street Journal report [1] detailing the ‘Hassett Effect’—the impact of Kevin Hassett’s potential Federal Reserve Chair nomination on the U.S. dollar. On November 25, 2025, the dollar stumbled as odds of Hassett’s nomination increased, with the Dollar Index (DXY) at 99.66 [1]. The event coincided with a sharp rise in Fed rate cut expectations: December cut odds jumped from ~42% to ~81% week-over-week [2][3].

Gold, which typically moves inversely to the dollar, saw a +1.42% gain in the GLD ETF on November 24 [0], aligning with the dollar’s pullback. Medium-term implications include potential further dollar weakness if Hassett is confirmed (due to his dovish stance on rate cuts [4]), declining U.S. Treasury yields [3], and outperformance of rate-sensitive sectors like real estate and tech [3].

1. Cross-Asset Correlation
   : The inverse relationship between gold and the dollar is reinforced—GLD’s gain directly reflects market expectations of dollar debasement [0][1].
2. Sentiment Amplification
   : Hassett’s nomination odds amplified an already shifting market sentiment, doubling rate cut expectations in a week [2][3].
3. Policy Uncertainty
   : The lack of clarity on Hassett’s detailed policy agenda (beyond rate cuts) adds layers of uncertainty to long-term market projections [4].

• Dollar Debasement
  : Mizuho Securities warns of potential dollar debasement if Hassett is confirmed, due to aggressive rate cuts and concerns over Fed independence [1].
• Volatility
  : A reversal in nomination odds could trigger sharp dollar rebounds and gold sell-offs [4].
• Inflation
  : Aggressive rate cuts may reignite inflation, leading to stagflation risks if economic growth remains weak [3].

• Gold & Bonds
  : Investors may benefit from gold (GLD) and long-duration bonds if rate cuts materialize [0][3].
• Rate-Sensitive Sectors
  : Real estate and tech sectors could outperform amid lower interest rates [3].

Critical metrics from the analysis include:

• GLD ETF (Nov24): +1.42% [0]
• December Fed Rate Cut Odds (Nov25): ~81% (up from ~42% week-over-week) [2][3]
• Dollar Index (DXY): 99.66 [1]

These metrics indicate a significant shift in market sentiment, driven by both rate cut expectations and the Hassett nomination. Decision-makers should monitor the nomination timeline (targeted pre-Christmas [4]) and Senate confirmation likelihood for further clarity.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Market conditions are subject to change.