The Senate Banking Committee gavels in at 10 am ET tomorrow for Kevin Warsh’s confirmation hearing, and traders should set a calendar reminder. Powell’s term expires May 15. Whoever sits in that chair next inherits an inflation rate that’s been above target for five years running, a jobs market wobbling, oil elevated on the back of the Iran conflict, and a President who has made “cut rates” something between a policy preference and a personal demand.

Warsh has been conspicuously quiet since the nomination, which means tomorrow is the first real look at where he stands. The market already knows the pre-nomination Warsh: Fed needs “regime change,” discard the stagflation forecast, AI will crush inflation, shrink the balance sheet, trim the deadwood. That’s the hawkish-sounding resume. The dovish tell is his argument that rates should come down because productivity is about to surge. Convenient that it lines up with what Trump wants. Senators will notice and he will be asked, this report from Politico shows he will at least go through the motions.

I don’t know if anyone will believe what he’s going to say but his confirmation is basically a foregone conclusion once Trump drops the probe into Powell. Tomorrow is the hearing, not the vote. What bothers me here is that his testimony is leaking to Politico, which is already bad form in a position that needs strict control of information.

The one question that actually matters for FX and rates: independence. Does Warsh defend it, dodge it, or genuflect? How hard will he go and will he be convincing without saying something that will lead Trump to pull his nomination? Bessent has already said “wait and see” on cuts given Iran. If he signals he’s ready to deliver what the White House is asking for, watch the long end. Curve steepeners have been the trade and they’ll get more interesting.

Given all the drama around Iran, this event isn’t going to be as interesting as it usually is.

Update more Warsh:

• Fed stretched credibility after financial crisis
• Independence is not threatened when elected officials state their views on rates
• Inflation is a choice and the Fed must take
• Independence doesn’t extend to all mandated functions, including public money and regulation
• He called this the most-significant hinge point in a generation

CNBC has obtained a full copy of the speech but only offered up some headlines. Warsh continues to be optimistic about technology (AI) and thinks it will add to growth and lower inflation.

I don’t love these comments. If Warsh truly wanted to appear as independent, he would make at least a token effort to defend Powell.