bloomshorts Global financial markets faced turbulence following revelations that President Donald Trump contemplated removing Federal Reserve Chairman Jerome Powell, igniting concerns over the central bank’s autonomy.
Investor anxiety was palpable as the yield on 30-year US bonds exceeded five percent, a reaction to the potential unprecedented move against the Fed’s leadership. European markets closed lower, and Wall Street saw declines, with the dollar depreciating over one percent against the euro.
Trump later dismissed the speculation as “highly unlikely” during a White House press interaction, yet did not completely deny the possibility. The Fed has maintained its benchmark interest rate since December, despite Trump’s vocal criticisms of Powell’s reluctance to implement quicker rate cuts.
Powell reiterated the Fed’s cautious approach, emphasizing the need to assess the impact of Trump’s tariff policies before making further adjustments to interest rates.
Market Reactions and Analyst Insights
Wall Street and European indexes relinquished early gains as traders evaluated the inflationary effects of Trump’s trade tariffs. Recent US inflation data suggested a tempered outlook for rate cuts, complicating the Fed’s decision-making process ahead of impending tariff deadlines.
Analysts highlighted the nuanced effects of tariffs on inflation, with some pointing to service sector costs as the primary driver, rather than tariffs. Meanwhile, tech stocks adjusted after Nvidia announced plans to resume chip exports to China, following eased US export restrictions.
Key Financial Indicators
Major indexes reflected the day’s uncertainty, with the Dow, S&P 500, and Nasdaq all recording losses. European markets similarly ended the day down, while Asian markets showed mixed results. Currency markets saw the euro and pound strengthen against the dollar, which also fell against the yen.
