Dollar Slips and Yields Rise as Trump’s Move to Oust Fed Governor Sparks Policy Concerns – US Market Wrap

The dollar fell, while longer-term Treasury yields rose, as President Donald Trump’s attempt to remove Federal Reserve Governor Lisa Cook raised concerns about central bank independence and inflationary risks.

While the moves were modest in slow summer trading, they reflected growing concern about political interference in monetary policy. That could give Trump another chance to appoint someone to the Fed board as he repeatedly pressures officials to lower interest rates.

The drop in 30-year Treasuries came after losses in longer-term debt from France and the United Kingdom, extending a decline fuelled by concerns about inflation and ballooning budget deficits. A strong $69 billion sale of two-year notes boosted gains in shorter-dated maturities. The spread between five and 30-year yields is the widest it has been since 2021.

While the dollar fell only 0.2%, it trailed most major currencies. The S&P 500 gained 0.4%, with Nvidia leading megacaps higher ahead of its earnings. UnitedHealth fell as an ongoing criminal investigation was said to be broader than a look into potential Medicare fraud.

Trump said he was prepared for a legal battle after removing Cook amid allegations she falsified mortgage documents. The Federal Reserve, for the first time this week, stated that it would follow any court decision in Cook’s legal challenge to Trump’s dismissal of her.