Bets on Hegseth leaving as defense secretary by year-end fade to unlikely

Expectations that Pete Hegseth will leave his post as Secretary of Defense by the end of the year dropped to unlikely on Friday, a clear drop from a toss-up earlier this week. The reason for the latest slide is not yet clear, and no development found around the time of the move explains it.

The move extends a pullback. Bets on Hegseth's exit spiked on Wednesday, reaching likely at their peak after CBS reported that President Trump had asked advisers whether Hegseth should stay following Republican losses in the November 3 midterms. They fell back within hours after Trump publicly rejected the idea of replacing him. Expectations held near a toss-up through Thursday and into Friday morning, then slid again in the evening.

Trump said on Thursday that he intended to keep Hegseth, while acknowledging that confirming a replacement would be easier before Democrats take control of Congress, according to ABC News. Pentagon spokesman Sean Parnell said Hegseth was committed to leading the department through the end of Trump's term. Hegseth also released a video vowing to fight impeachment. The Associated Press reported that Hegseth was not being considered for Tennessee's soon-to-be-vacant Senate seat, despite speculation.

The backdrop is a push in the House. Rep. Thomas Massie introduced articles of impeachment on September 15, accusing Hegseth of unlawfully directing military action against Iran. The House left for its election recess without voting. Massie has said he planned to force a vote the week of November 9 if Hegseth remained in office.

The question covers whether Hegseth leaves office, or announces his resignation or removal, by December 31. An announcement before then would count even if it took effect later.

What comes next is the impeachment effort. Massie told ABC he intends to introduce his resolution on November 9 or 10. A House impeachment vote would not by itself remove Hegseth, since a Senate conviction is a separate question. Whether Trump's stated support holds, and whether the House acts, will shape how likely traders think an exit is in the weeks ahead.