Trump unexpectedly visits the Fed, is Powell's position in danger?

In a rare and dramatic move, U.S. President Trump is reportedly set to visit the Federal Reserve headquarters in Washington D.C. today at 4 PM Eastern Time. This will be the first official visit of a president to the Fed in nearly two decades. However, this visit does not appear to be a social meeting. Trump's visit comes amid escalating tensions with Fed Chairman Jerome Powell. He has launched a series of public attacks against Powell, criticizing him for both economic policy decisions and alleged mismanagement of costs related to the renovation of two historic Fed buildings. Trump even criticized Powell for keeping interest rates at 4.3% and for poorly handling inflation. Trump targets the Fed's control? The Fed has defended its position by arguing that they are waiting for a comprehensive assessment of the impact of Trump's tariffs before making any further moves. Meanwhile, Trump does not believe this and suggests that Powell could be fired. He argues that Powell should continue to lower interest rates to stimulate the economy amidst rising trade tensions. In a sign of internal division, Finance Minister Scott Bessent took steps to soothe emerging concerns on Wednesday. He is reported to have said that "there is nothing to suggest [Powell] should resign at this moment." This provided the market with a brief sense of comfort. The S&P 500 and Nasdaq reached record highs amid the tensions.

The White House confirmed the visit in a late-night press release but did not say whether Trump would meet directly with Powell. Deputy White House Chief of Staff James Blair had previously stated that administration officials would attend the Fed visit but did not confirm the president's participation. However, now everything is clear. Polymarket bets on Powell's fate The market is watching closely. Traders on Polymarket are expressing their views on this issue. Currently, only 1% predict that Jerome Powell will leave the position of Fed Chairman on July 31, while 14% bet that Trump will attempt to fire Powell on August 31. 19% believe that Jerome Powell will leave the position of Fed Chairman in 2025.

On the other hand, U.S. Treasury yields ticked up slightly on Thursday morning. The yield on the 10-year bond is hitting 4.4%, as investors brace for a potentially politically charged showdown. Tensions over the independence of the central bank, interest rate policies, and even the renovation of the building have now collided at a moment that could be pivotal for the relationship between the Fed and the White House. Trump appointed Powell during his first term. Biden has re-nominated him. Now, Trump's return to Washington and the Fed signaling that he wants to regain control of the situation. In this context, the US and the EU may be moving closer to a new trade agreement. European officials have stated that this deal could impose a 15% tariff on most EU exports to the US.