Stocks and bonds whipsaw, US dollar sinks as Trump denies flurry of media reports he will fire Fed Chair Jerome Powell

The S&P 500 slumped to session lows, 30-year US Treasury yields jumped about 9 basis points to their highs of the day, and the US dollar nosedived after CBS News reported that President Trump indicated in a meeting with Republican lawmakers last night that he would fire Fed Chair Jerome Powell. Stocks and bonds reversed nearly all of their losses while the US dollar pared some of its declines after Trump said he was not planning to fire the Fed chair in response to that and several other reports.

Bloomberg had followed up the CBS report with an article saying that the president is “likely” to fire the top US monetary policymaker “soon,” citing an unnamed White House official who cautioned that a final decision has not been made. And The New York Times says that Trump has even drafted a letter firing Powell, which he showed to those lawmakers. Trump has denied that he drafted such a letter.

The president has lambasted the Fed chair for failing to lower interest rates more aggressively. The Federal Reserve has been holding off on continuing the rate-cutting cycle it started in the second half of 2024 amid worries that tariffs may produce another bout of inflation that proves enduring. It says that solid conditions in the labor market mean there’s little urgency to reduce borrowing costs right now.

Critics of Powell have argued that cost overruns tied to renovation projects of Fed buildings could be considered just cause for ousting the central bank chief. Any attempt to fire Powell would likely result in a legal battle.