US Stocks Push Higher as Trump Fires Fed Governor – S&P up 0.4%
US stocks moved higher in trading yesterday as President Trump increased his attack on the Federal Reserve Bank by firing Governor Lisa Cook. The Dow closed up 0.30% at 45,410, the S&P added 0.41% to move to 6,465, and the Nasdaq gained 0.44% to 21,544. The dollar and Treasury yields fell, with the DXY down 0.20% to 98.24, the 2-year yield down 4.5 basis points to 3.679%, and the benchmark 10-year yield down 1.4 basis points to 4.261%. Oil prices fell from 3-week highs, with Brent down 2.19% to $67.29 and WTI down 2.28% to $63.32 a barrel. Gold jumped higher on the back of haven flows, up 0.82% to $3,393.57 an ounce.
The Fed Remains Under Attack from the Oval Office
Traders and investors alike are now trying to analyse the potential impact of further attacks on the Federal Reserve Bank from President Trump and the White House. News that Trump had fired Governor Lisa Cook yesterday after fraud accusations (the irony was not lost on many!) caused shockwaves across the market in trading yesterday, and market reaction has so far been relatively muted, as it is not seen as having too much of an effect on Fed thinking. However, concern is starting to increase across all global financial markets that Trump is making a strong play to control the Fed, and if we see this behaviour continue—or indeed ramp up further—it would be detrimental to confidence in US markets as a whole. Another move in the short term could see a much stronger reaction, which could lead to sharp moves, with the dollar likely to take much of the pain, alongside US stocks.
Quiet Calendar Brings Geopolitics into Focus
It is a quiet day on the macroeconomic calendar today; however, traders are expecting to see more moves in the market on the back of any fresh geopolitical updates, with the Ukraine and Fed issues very much in focus. The main fundamental update of the day comes early, with all eyes on Australian markets in the Asian session for the release of the latest key inflation update. Market expectation is for the headline year-on-year number to come in at a 2.3% increase, and even though that is within the target range, it is substantially higher than the last 1.9% print. Traders are expecting that anything ±0.2% off that forecast is likely to see big moves in the Aussie. There is nothing of note being released in the London session, but we do have the usual weekly US Crude Oil Inventory data (exp. -1.7m barrels) coming out once New York opens, and we are set to hear from Fed member Thomas Barkin later in the day, which could see some volatility. However, any fresh updates are expected to have a greater effect on markets today.
