Bond Market Update

Powell to be Fired?

• A Bloomberg report that President Trump is likely to fire Fed Chair Powell soon has caused a stir in the capital markets. It needs to be noted that the same report said a final decision has not been made and that the president could change his mind.
• The 2-yr note yield, which is more sensitive to changes in the fed funds rate, moved to lower lows in today's session, while the 10-yr note yield and 30-yr bond yield, which are more sensitive to inflation pressures, moved higher. Currently, the 2-yr note yield is down eight basis points to 3.86%, the 10-yr note yield is down one basis point at 4.48% (after trading down to 4.44%), and the 30-yr bond yield is up three basis points to 5.05% (after trading down to 4.97%).
• An unnamed White House official getting the word out on the possibility of the president firing Fed Chair Powell could very well be a trial balloon. The president has said in the past that he won't fire Fed Chair Powell, but if he sees that the market holds up reasonably well on the report of such a possibility, that could increase the chance of the president moving to replace Mr. Powell before his term ends in May 2026.
• Yield check:
  • 2-yr: -7 bps to 3.89%
  • 3-yr: -6 bps to 3.87%
  • 5-yr: -5 bps to 4.00%
  • 10-yr: -1 bp to 4.48%
  • 30-yr: +3 bps to 5.05%