| Interest Rate Market Snapshot | ||||||
| Federal Funds | SOFR | 2Y Treasury | 5Y Treasury | 7Y Treasury | 10Y Treasury | |
| 4.33% | 4.32% | 3.74% | 3.93% | 4.14% | 4.36% | |
“Powell’s termination cannot come fast enough”
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So, here’s the latest political drama: President Trump is once again going after Jerome Powell. He says Powell should be out of a job—like, yesterday—because the Fed hasn’t been cutting interest rates fast enough this year
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Trump even dusted off an old nickname, calling Powell “Too Late,” and took to Truth Social to say, “Powell’s termination cannot come fast enough!”
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It’s not exactly clear if Trump means Powell should be fired immediately or if he’s just counting down the days until Powell’s term ends
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For context: Powell’s term as Fed chair runs through May 2026, and he stays on the Fed’s board until early 2028. The White House hasn’t officially responded yet
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source: x
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Powell isn’t just brushing this off. He pointed out that there’s actually a Supreme Court case people are watching that might affect how agency officials—like himself—can be removed. He didn’t say much more, just that it’s something they’re “monitoring carefully.”
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He also stood firm on the Fed’s independence, calling it “a matter of law,” and noted that there’s no clause in the statute for removing the chair without cause
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Meanwhile, Treasury Secretary Scott Bessent mentioned that the White House is likely planning to replace Powell by fall—about six months before his term officially ends
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Yet, Bessent also stressed the importance of keeping the Fed independent, likening it to a “jewel box” that needs protecting
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In his view, letting the central bank do its job without political interference is essential—especially now, with rising prices, trade tensions, and shaky global growth
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Why It Matters
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While it's more art than science, when the Fed changes policy rates, the front end of the yield curve listens. When the Fed speaks, the long end listens
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In a world where inflation expectations are rising through the roof—and tariff-driven inflation looms large—the Fed’s voice has never mattered more in keeping long-term yields anchored
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But if the president can fire the Fed chair at will, that independence vanishes—and so does the weight of the Fed’s voice
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Any opinion Trump shares would be instantly priced in by markets—regardless of what the actual inflation or employment data says
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If he calls for lower rates, markets would likely assume the Fed will follow. That could drive short-term yields down and send long-term yields higher
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The Fed’s credibility is built on its independence. It’s guided by data, not politics. Without that independence, markets are left with a much more complex equation. It’s no longer just about reading the data—it’s about reading the politics, too
Calm Settles In
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Blame it on a holiday shortened week or not, market volatility has calmed down a ton - I’ll take it
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Rates are, for now, listening to Powell’s “wait and see” approach until…June
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By June 18th, the market has a greater chance, than not, of the Fed capitulating and cutting rates by 25 bps
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By the end of the year, nearly 4 rate cuts are priced into fed fund futures, with one more sometime in 2026
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Compare and contrast that to a Fed that wants to see the impact of tariffs and DOGE layoffs before doing anything
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Add me to the camp of believing the Fed and expecting the next rate cut to come at the end of the year at the earliest (coincidently right when Bessent’s timeline to fire Powell lines up)
source: bloomberg
source: bloomberg
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