Investor Sentiment On The Fed And New Chair Kevin Warsh

At the end of June, we ran a mid-year survey of Bespoke's client base of incredibly smart investors (of course!).  It's a helpful way to get a near real-time gauge on investor sentiment across a number of important topics.  One section of the survey that's timely because of recent changes at the top is the Fed.  We asked clients for their opinion on new Fed Chair Kevin Warsh, how much credibility the Fed has, and whether the Fed's next move will be a rate hike or cut.

Below we share the results of our Fed questions and how they compare to readings taken at the end of 2025 when Chair Powell was still in charge.

In terms of job expectations for Chair Warsh, 61% expect him to do a better than average job, with 45% saying "good" and 16% expecting "excellent."  32% said Warsh will do an average job, while just 7% think he'll do a below-average job.  Those are pretty solid expectations for the new Fed Chair.

At the end of 2025, 61% also said Powell was doing an above-average job, while 15% said below average.

While futures markets are pricing in odds of a hike later this year, our survey-takers think the opposite will occur first.  We asked clients which will happen first when it comes to the Fed's interest rate policy, a hike or a cut?

As shown below, 56% of investors think a cut will happen first compared to 44% that chose a hike.

In addition to asking about Warsh's job expectations, we asked clients for their current view of the Fed as an institution.

At the end of 2025, 23% said the Fed was "highly competent and independent."  That number came in roughly the same as of mid-year at 22%.  The percentage that said the Fed is "generally competent but occasionally political" received the highest vote count at 46%, up 7 percentage points from a reading of 39% at the end of 2025.  18% said the Fed does an average job that does more harm than good sometimes.  That's down from 24% at the end of 2025.

In terms of direction, the numbers show that the Fed received a small bump in confidence in the first six months of the year as leadership at the top changed.

Our final question asked survey-takers to rank the Fed's credibility with markets and investors.  A reading of 1 equals zero credibility compared to 10 for rock-solid credibility.

As shown in the chart below, comparing results from the end of 2026 with mid-year 2026, Fed credibility has jumped a bit as Warsh takes the helm.  We saw a slight uptick in 8s and 9s compared to a downtick in 7s, and the number of 1s, 2s, 3s, and 4s went down while 5s and 6s jumped.

Based on our mid-year survey, investors appear to be giving the Fed a clean slate as Warsh takes over for Powell with generally positive expectations.  Our client base of investors also appears to have a different view on the future direction of the fed funds rate than current futures pricing, with a higher percentage expecting the next move to be a cut rather than a hike.  If we don't end up getting cuts, Fed sentiment could certainly change quickly.