By Bas van Geffen, Senior Market Strategist at Rabobank

When the Fed decided to hold rates unchanged last Wednesday, Waller was one of the two dissenters in favour of another rate cut. Waller's dissenting vote may have kept him on President Trump's list of potential Fed chairs, but it now seems that it did not get him to the top of that list. Reportedly, Trump is ready to announce Kevin Warsh as his nominee (ZH: Trump officially nominated him this morning)..

The dollar has regained some strength. Perhaps that's thanks to Warsh' credentials as a former monetary policy hawk – prioritizing inflation control and favouring a smaller Fed balance sheet. However, let's not forget that President Trump's first selection criterion is whether the candidates are willing to pursue lower interest rates. So, if he does nominate Warsh later today, he is unlikely to be as hawkish as he once was – unless he has hidden that very well in his interviews with the president. Indeed, Warsh has recently also called for rate cuts.

Nonetheless, compared to the other candidates, Warsh is certainly more on the hawkish side of the spectrum. And so, most asset classes wavered. Treasury yields opened the day higher, and equities slid, with Chinese markets down 1% on the day. The record-breaking streaks in gold and silver have also ended – at least for now. The precious metals are currently down about 8% and 12% from their peaks, respectively. And that is despite concerns over a potential escalation in the Persian Gulf.