White House pressure on Fed Chair Jerome Powell is not fully priced into U.S. bond markets, says Natixis. Uncertainty over Trump’s Fed pick may impact future yields.
Analysis: U.S. Bond Market May Be Underestimating Political Pressure on Powell
According to Jinshi Data, Natixis analyst John Briggs believes that political pressure from the White House on Federal Reserve Chair Jerome Powell has not been fully reflected in U.S. bond market pricing.
Briggs noted that investors have already priced in expectations for interest rate cuts this year, pushing down short-term Treasury yields. However, long-term yields have risen amid growing concerns about the U.S. fiscal deficit. He added that unless markets gain clearer insight into former President Donald Trump’s preferred successor for the Fed chair role, future pricing may remain uncertain.
Powell has stated his intention to serve out the remainder of his term, which ends in 2026. However, if Trump wins the 2024 election, he is widely expected to nominate a more dovish replacement, which could influence long-term policy expectations and yield dynamics.
The market remains focused on macroeconomic data and evolving political signals as it seeks clarity on future monetary policy direction.