(Bloomberg) — The dollar fell, longer-dated bond yields rose and stocks wavered as Donald Trump’s push to remove Federal Reserve Governor Lisa Cook fueled concerns about central bank independence and inflation risks.
While the moves were modest in listless summer trading, they underscored growing unease over political interference in monetary policy. The move could give Trump another chance to name someone to the Fed board as he repeatedly pressures officials to cut rates.
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The yield on 30-year Treasuries climbed four basis points to 4.93%. Two-year yields fell on continued speculation the Fed will cut rates next month. The gap between five and 30-year US yields widened to as much as 116 basis points — the steepest since 2021.
While a dollar gauge dropped by a mere 0.2%, the greenback retreated against the majority of its developed-world counterparts. The S&P 500 was little changed.
Trump moved to oust Cook following allegations that she falsified mortgage documents. She was defiant, saying that Trump has no authority to fire her and she won’t step down.
“Trump’s push to fire Cook has exacerbated concerns about the Fed’s independence,” said Ian Lyngen at BMO Capital Markets. “While the price action in US rates has been largely contained to the recent range, many of the go-to hedges against an erosion of Fed independence outperformed on the news of Cook’s firing.”
Lyngen also noted that perhaps the most revealing dynamic was the twist steepening of the curve as the front-end rallied while longer-dated notes and bonds sold off.
Even as political headlines flare, investors remain anchored to a bullish market script: a likely September interest-rate cut, resilient economic growth, and corporate earnings strong enough to keep equity sentiment afloat.
“An independent Fed remains the dominant framework,” said Dennis DeBusschere at 22V Research. “There is no reason to go against that yet, but hedges are important.”
“We will continue to monitor rising political pressure on the Fed, but expect its decision-making to remain guided by its mandate in the near term,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.
More specifically, she noted Chair Jerome Powell’s recent dovish signals at Jackson Hole that have reinforced market expectations for US rate cuts starting in September
“Looking further ahead, the risk of a more politicized Fed could increase over the next 6-12 months, particularly if partisanship also grows among regional Fed presidents,” she noted.
Corporate Highlights:
EchoStar Corp. has agreed to sell spectrum licenses to AT&T Inc. for about $23 billion in a deal that may help the satellite telecommunications company stay afloat and fend off regulatory concerns about its airwave use. Eli Lilly & Co.’s experimental obesity pill helped patients lose 9.6% of their body weight in a trial that moves the company one step closer to a potential approval. Retail trading platform Interactive Brokers Group Inc. will be added to the S&P 500 later this week, replacing Walgreens Boots Alliance Inc. on the closely watched gauge of US stocks. South Korean firms announced a flurry of deals with US businesses, including $50 billion in agreements with Boeing Co. and GE Aerospace, after the nations’ leaders met in-person for the first time in Washington on Monday. Bank of Montreal topped estimates on stronger-than-expected performance at its US division as the lender works to improve the business’s prospects and loan-loss provisions came in lower than forecast. Bank of Nova Scotia topped estimates after posting strong performance in its Canadian banking unit, a key focus point for investors as the firm works through a turnaround plan, and higher overall revenue. Orsted A/S rushed to reassure investors over a proposed 60 billion-krone ($9.4 billion) share sale, saying it will go ahead as planned and cushion the beleaguered Danish wind giant against any worst-case scenario. Ping An Insurance (Group) Co.’s profit fell 8.8% in the first half as investment returns were dented by stock market volatility and lower interest rates during China’s economic slowdown. Some of the main moves in markets:
Stocks
The S&P 500 was little changed as of 9:52 a.m. New York time The Nasdaq 100 was little changed The Dow Jones Industrial Average was little changed The Stoxx Europe 600 fell 0.7% The MSCI World Index fell 0.3% Currencies
The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.3% to $1.1656 The British pound rose 0.2% to $1.3480 The Japanese yen rose 0.2% to 147.55 per dollar Cryptocurrencies
Bitcoin rose 0.1% to $109,704.92 Ether rose 2.2% to $4,450.44 Bonds
The yield on 10-year Treasuries was little changed at 4.28% Germany’s 10-year yield declined two basis points to 2.73% Britain’s 10-year yield advanced five basis points to 4.75% The yield on 2-year Treasuries declined three basis points to 3.69% The yield on 30-year Treasuries advanced four basis points to 4.93% Commodities
West Texas Intermediate crude fell 1.5% to $63.82 a barrel Spot gold rose 0.3% to $3,375.13 an ounce ©2025 Bloomberg L.P.