Dollar Slips, Long Bonds Hit as Trump Targets Fed’s Cook – Europe Market Wrap

The dollar slipped as traders offloaded longer-dated US Treasuries following President Donald Trump’s bid to oust Federal Reserve Governor Lisa Cook, stoking fears over the outlook for inflation.

The 30-year Treasury yield climbed four basis points to 4.93% as the move against Cook fueled concern that price pressures could intensify were Trump to reshape the Fed’s policy committee to favor lower borrowing costs. The dollar edged 0.1% lower. S&P 500 futures were little changed.

In Europe, the Stoxx 600 retreated 0.6% after French Prime Minister Francois Bayrou called a confidence vote that could bring down his government as soon as next month. France’s CAC 40 index tumbled 1.5% to the lowest in two weeks. The yield premium on French 10-year bonds over German peers widened two basis points to 77 basis points, the most since April.

Risk appetite received a further knock after Trump renewed his trade brinkmanship, threatening fresh tariffs and export restrictions on advanced technology and semiconductors in retaliation against digital services taxes abroad.

Stocks and bonds were already under pressure after the optimism that followed Fed Chair Jerome Powell’s address at Jackson Hole faded on Monday. Doubts about the pace of easing are lingering ahead of an inflation report later this week, expected to highlight sticky price pressures.

For the Fed, swaps imply about an 80% chance of a Fed quarter-point rate cut next month, with at least one more expected by year-end.