Donald Trump’s war of words with Jay Powell is likely to do lasting damage to the $29tn Treasury market, even after the US president backpedalled on his apparent threat to fire the Federal Reserve chair, big investors have warned.
Trump this week said he had “no intention” of firing Powell, but reiterated his complaint that the Fed has been slow to cut borrowing costs. With Powell’s term as chair set to end in May 2026, the episode has fuelled investor fears about Fed independence and the path of US monetary policy.
“Once you say it, you’ve said it, and while you can walk it back, in the back of people’s minds is, what’s the next surprise?” said Andrew Chorlton, chief investment officer for fixed income at M&G Investments. “If your comfort level around the independence of the Fed . . . is being reduced, you expect to pay more for it.”
Growing worries about central bank independence — with the president…
