Justice Department drops investigation into Fed Chair Powell, easing Warsh’s path

## Market Snapshot

In the “Jerome Powell Out as Fed Chair by May 14, 2026” market, YES is priced at 1.6%, up from 1% yesterday. For the May 31, 2026 market, YES stands at 98.2%, showing a significant increase from 81% a week ago.

## Key Takeaways

– Dropping the investigation removes a major obstacle for Kevin Warsh’s confirmation, suggesting a smoother transition. – The market’s current pricing implies participants view Powell’s exit as highly likely by May 31. – The absence of an appeal suggests a de-escalation in tensions between the executive branch and the Federal Reserve.

## Article Body

U.S. Attorney Jeanine Pirro announced on April 24, 2026, that the Justice Department has dropped its criminal investigation into Federal Reserve Chair Jerome Powell. The investigation, which was initiated in November 2025, focused on alleged false statements made by Powell to Congress regarding the Federal Reserve’s headquarters renovation. This development is expected to facilitate the Senate confirmation of Kevin Warsh, President Donald Trump’s nominee to replace Powell. The closure of the investigation marks a reduction in executive pressure on the Federal Reserve’s independence, following a series of subpoenas that were quashed by the courts. This decision may ease President Trump’s long-standing public disagreements with Powell over interest rate policies.

## Market Interpretation

The market impact appears moderate, as evidenced by the significant rise in YES pricing for Powell’s exit by May 31, 2026. This is consistent with the scenario where the removal of legal barriers accelerates the transition to Kevin Warsh. The absence of an appeal and subsequent de-escalation in political tensions are supportive of this outcome.

## What to Watch

Key developments to monitor include any official announcements from Powell regarding his resignation and the scheduling of Kevin Warsh’s confirmation hearings in the Senate. Additionally, any statements from the White House or Federal Reserve indicating changes in leadership or policy direction could provide further clarity on the market outcome. The behavior of financial markets in response to these events will also be crucial in assessing the likelihood of Powell’s exit by the specified dates.

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