The dollar recedes as investors got unloaded in the long run bonds of the US State following President Donald Trump’s attempt to remove US Federal Bank (Fed) Governor Lisa Cook, triggering fears about the long -term prospects of inflation.
The yield on 30 -year US government bonds increased by three basis points to 4.92%, as the move against Cook triggered concerns that inflation could be intensified if Trump remodeling the Fed Policy Committee. The yields of the 2 -year bonds fell due to expectations to reduce interest rates. The dollar fell 0.2%, while future S&P 500 contracts drop 0.15%. Nvidia rose 0.5% to pre-markets, pending tomorrow’s results (27.8.2025).
In Europe, the Stoxx 600 fell 0.62% following the proposal of French Prime Minister François Bairou for a vote of confidence that could lead to a fall in his government as early as next month. The French CAC 40 declines 1.66% to the lowest level of the last two weeks. The performance difference of French 10 -year bonds over German bonds has been widened by two basis points, reaching 77 basis points, the highest level than April.
The willingness to take on a risk was hit by another blow, after Trump renewed his commercial acrobatics, threatening new duties and restrictions on state -of -the -art exports and semiconductors, as retaliation for taxes on digital services abroad. The shares and bonds were already under pressure, as the optimism that followed the speech of Fed President Jerom Powell at Jackson Hall.
Doubts about the relaxation rate remain in view of the inflation report later published this week and is expected to point out persistent pressures on prices. “If the Fed is believed to succumb to government pressure and reducing interest rates prematurely to calm the White House, there is a risk that inflation will be established,” said Tom Essaye of The Sevens Report. “Since long -term bond yields depend mainly on inflation expectations, this pressure is pushing up the performance of 30 -year public bonds.”
Concerning France, “the difference in performance between French and European shares can only be increased from now on,” said Andrea Tueni, head of Saxo Banque France. “The next big step would be the performance of the French 10 -year bonds to overcome that of the Italians, which would really be an important milestone.”
For the Fed, Swaps indicate about 80% of the interest rate reduction by a quarter of the percentage next month, with at least one expected by the end of the year.
Cook’s removal would give Trump the opportunity to secure a majority of four people on the Fed’s seven -member board. Her term of office was not to expire until 2038.
Trump said he had a “sufficient reason” to dismiss Cook, the first black woman to serve on the Fed Board of Directors in Washington, on the claims that he made false statements about one or more mortgages.
Cook said Trump has no power to dismiss her and that he would not resign. Cook’s lawyer Abe Lowell said they intend to take “all necessary measures to prevent Trump’s” illegal action “. Fed refused to comment.