Stocks shrugged off President Donald Trump’s bid to remove Federal Reserve governor Lisa Cook, but the move is stirring up some trouble in Treasuries.<\/p>\n
The Dow was flat, and the S&P 500 was up 0.1%. The tech-heavy Nasdaq Composite was up 0.2%. The slight move in the three main indexes this morning mirrors yesterday\u2019s price action.<\/p>\n
It comes after Trump announced Cook\u2019s removal from the Fed\u2019s Board of Governors, effective immediately. Forcing out Cook would allow Trump to appoint a loyalist who can heed to his demands on lowering rates. The need for a politically independent Fed is so that the central bank can take actions that might hurt the economy in the short term, but set it on a more appropriate long-term trajectory with stable prices.<\/p>\n
Treasuries have likely have sniffed this erosion in independence. Yields on 10-year and 30-year bonds are higher, but perhaps the most revealing dynamic has been the increase in spreads. The difference in yields between the 2-year note and 30-year bond, or the 2Y 30Y spread, is currently at 1.218, the highest since Jan. 7, 2022. The 2Y 10Y spread is the steepest since late April.<\/p>\n
\u201cTrump\u2019s push to fire Cook has exacerbated concerns about the Fed\u2019s independence and US creditworthiness,” wrote Ian Lyngen, BMO Capital Markets\u2019 rate strategist. “We see further scope for Trump\u2019s challenge to the Fed\u2019s independence to push term premium high and steepen the yield curve.”<\/p>\n
Spreads had also steepened after Trump chose Council of Economic Advisers Chairman Stephen Miran to serve as a Fed governor, replacing Adriana Kugler. A potential replacement for Cook will further shape the central bank to lean more dovish, cutting rates quicker and more frequently.<\/p>\n
On tap today is consumer confidence data for August that comes out at 10 a.m. Eastern. Durable goods orders came in better than expected.<\/p>\n","protected":false},"excerpt":{"rendered":"Stocks shrugged off President Donald Trump’s bid to remove Federal Reserve governor Lisa Cook, but the move is…\n","protected":false},"author":2,"featured_media":8139,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[84,467,56,54,55],"class_list":["post-94488","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-business","tag-markets","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/94488","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=94488"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/94488\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/8139"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=94488"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=94488"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=94488"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}