For David Randall, Lewis Krauskopf and Shreyashi Sanyal
NEW YORK, Nov 22 (Reuters) – Jerome Powell’s election to continue as chairman of the Federal Reserve gives global investors stability and some predictability as the central bank prepares to reduce its asset purchases and begin raising rates of interest.
Many investors expected Powell, who was named president by Donald Trump in 2017, to be re-appointed by Joe Biden for another four-year term. The Democratic president proposed it on Monday for another four years, and Lael Brainard, who was the other candidate, for the position, of vice president.
Biden also has three Fed vacancies to fill, including that of vice president of supervision, and plans to do so in early December.
Powell’s current tenure, which ends in February 2022, has proven positive for risk assets, as the S&P has gained 69.7% since his appointment on February 5, 2018 and has broken a series of new records. , partly aided by emergency measures the Fed put in place in response to the coronavirus pandemic.
“My reaction is one of relief,” said Peter Tuz, president of Chase Investment Counsel. “It was a firm hand, I think people generally liked the policies that he pushed since (COVID-19) became a problem.”
Tuz said Powell was “beloved by both parties and he’s been a pretty stable force.”
Yields on US government bonds, which move inversely to prices, rose on the news, and those on two- and five-year Treasuries reached their highest levels since early 2020. The dollar extended gains versus a basket of currencies and the S&P 500 opened higher.
Powell had always been the favorite, but there were doubts after his odds in the betting markets fell following strong criticism of his performance by progressive Democrats and a scandal over activity in the markets by Federal Reserve officials.