Bonds & Stocks
President Donald Trump’s unprecedented and escalating attack on the Federal Reserve runs the risk of backfiring by hitting financial markets and the economy with higher long-term borrowing costs. The 10-year Treasury yield, which determines what Americans pay for mortgages, business loans, and other debts, has been stubbornly high due to tariffs, the budget deficit, and Trump's tax cuts.
Economy
On Aug. 25 Trump posted on Truth Social that he’s firing Fed Governor Lisa Cook “effective immediately.” Trump alleges that representations she made in mortgage applications before she became governor meet the “for-cause” standard for firing set in the Federal Reserve Act. Cook issued a statement through her lawyer that she’s not resigning. Financial markets are starting to take the move seriously. If Trump can force out Cook, he’ll have four appointees on the Fed board, moving FOMC incrementally closer to Trump’s view that aggressive rates cuts are needed.
World
US President Donald Trump warned of “an economic war” if he cannot get Russia’s Vladimir Putin and Ukraine’s Volodymyr Zelenskiy to end their conflict, saying he had “very serious” consequences in mind if the fighting continues. “It won’t be a world war, but it’ll be an economic war, and an economic war is going to be bad. It’s going to be bad for Russia, and I don’t want that,” Trump said at a meeting with his cabinet members Tuesday at the White House.