The spreading expectation that President Barack Obama will name Lawrence Summers to lead the US Federal Reserve appears to be working against the central bank's efforts to stimulate the economy.
The jitters even have some analysts betting that a Summers nomination could lead to slower economic growth, less job creation and higher interest rates than if the president named Janet Yellen, the Fed's vice chairwoman.
Businesses raising money and people buying homes and cars all have faced higher interest rates in recent months as the Fed's campaign to suppress borrowing costs has faltered. The rise in rates reflects optimism that the economy is gaining strength, and an expectation that the Fed will begin to pull back its bond buying program later this year. But analysts also see evidence of a Summers effect.
Many investors expected that Ms Yellen would be nominated to replace Ben Bernanke as head of the central bank, a choice that would have sent a clear message of continuity. Instead, investors are now trying to anticipate how Mr Summers might change the Fed.
The unease is the result of a little information and a lot of speculation. Mr Summers, a Harvard University economist who served for two years as Obama's primary economic adviser, has said little about monetary policy in recent years.
"People don't know what Larry might do," said Mohamed El-Erian, chief executive of Pimco, one of the world's biggest bond fund managers. "There's a lack of information on Larry's views. We don't have enough information to make an assessment, just some second- and third-hand accounts."
The President's top economic advisers uniformly support the selection of Mr Summers. They regard him as a creative thinker and an experienced crisis manager, qualities they value because they expect the Fed may confront difficult choices as it begins to retreat from its stimulus campaign.
They also insist Mr Summers supports the Fed's efforts to revive the economy and would continue those efforts. But Mr Summers has criticised the Fed's purchases of Treasury securities and mortgage-backed securities, warning that bond-buying on such a scale could distort financial markets. As a result, many investors suspect he would seek to end those purchases more quickly than Ms Yellen.
Julia Coronado, chief North America economist at BNP Paribas, said last week the yield on the benchmark 10-year Treasury note had started to rise as investors price in a Summers nomination. She said the yield could rise half a percentage point more than if the President nominated Mr Yellen.
She estimated this Summers effect would reduce domestic economic growth by a 0.5 to 0.75 percentage point over the next two years, which could reduce job creation by 350,000 to 500,000 jobs.