Global Credit Bullets | Monday, 2 February 2026

Federal Reserve – Name game finally over

Last Friday, Donald Trump nominated Kevin Warsh as the next Chair of the Federal Reserve. Markets were somewhat surprised, with Rick Rieder widely seen as the frontrunner. Warsh previously served as a Governor at the Fed between 2006 and 2011, playing a visible role during the Global Financial Crisis. The individual selection is of secondary importance: any candidate chosen is likely to be perceived as broadly aligned with the administration’s policy preferences and prepared to deliver on them. Warsh will nonetheless need to build consensus within the Federal Open Market Committee, as a politically driven appointment risks limited internal support.   Warsh broadly favours lower rates and a smaller balance sheet and is viewed as credible by markets. This suggests little near-term change, as any incoming Chair would likely cut to align with the administration, while still offering a steady and reliable hand when tougher policy settings or market stress emerge.  The Chair’s mandate lasts four years, with the possibility of renewal for another four, implying potentially up to eight years of policy influence. Initial market reaction carried a mildly anti-debasement tone, with the USD firmer on reduced concerns over Federal Reserve independence.

Japan – Intervention or Illusion?

Following speculation about a potential intervention from both US and Japanese authorities, the Japanese yen rallied by almost 4% over three sessions against the dollar.  However, expectations were scaled back after US Treasury Secretary Scott Bessent denied last week that a coordinated intervention was coming. The US administration appears to favour a weaker USD against Asian currencies for trade reasons. Washington sees upside in a gradual and orderly depreciation of the dollar, although rhetoric, including from the President, has remained mixed.

Algebris Investments’ Global Credit Team