Trump says he's not planning to fire Fed's Powell
"Such reports are not true," Trump said, while speaking to reporters at the White House.
"I don't rule out anything, but I think it's highly unlikely unless he has to leave for fraud," he added, referencing criticism from the White House and Republican lawmakers over cost overruns in the US$2.5 billion renovation of the Fed's historic headquarters in Washington.
MARKETS REACT TO RUMOURS
The initial report sparked a drop in stocks and the US dollar, and pushed Treasury yields higher. Stocks pared some of their losses and Treasury yields pulled back slightly after Trump walked back the rumours.
Nevertheless, Trump renewed his criticism of Powell, calling him a "terrible" chair and accusing him of failing to cut interest rates.
He acknowledged discussing the idea of firing Powell with some Republican lawmakers, but said he remained more cautious than them about the approach.
Asked whether the White House had signaled any move to oust Powell, a Fed official pointed to the chair's repeated public statements that he intends to complete his term, which ends on May 15, 2026.
Powell was first nominated by Trump in 2017 and re-nominated for a second term by President Joe Biden in 2021.
FED RENOVATION UNDER FIRE
Last week, the White House escalated its criticism of the central bank over a costly renovation project. Office of Management and Budget Director Russell Vought sent Powell a letter saying Trump was "extremely troubled" by the renovation's expenses.
In response, Powell asked the Fed's inspector general to review the project and the central bank published a factsheet rebutting some of Vought's claims, including those about VIP dining rooms and elevators inflating costs.
BOND YIELDS SURGE ON FIRING RUMOURS
The yield on the 30-year US Treasury bond surged above 5% on Wednesday after the Bloomberg report suggested Trump was seriously considering firing Powell.
Yields spiked following news that Trump had met with Republican lawmakers Tuesday night, during which some reportedly urged him to remove Powell, challenging the long-held tradition of central bank independence.
Trump's later comments that it was 'highly unlikely' appeared to calm markets slightly, though uncertainty remained.
'The market is clearly skittish about any perceived threat to Fed independence,' one analyst said. 'Even vague comments from the president can have a real impact on investor sentiment.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
2 hours ago
- Business Times
Caution, greenwashing concerns slow South-east Asia's sustainable finance in Q1 2025
[SINGAPORE] Proceeds from environmental, social and governance (ESG)-labelled debt instruments in South-east Asia fell sharply in the first quarter of 2025, as companies and investors grew more cautious amid geopolitical tensions, economic uncertainty and rising scrutiny over greenwashing risks. According to financial data provided by LSEG, ESG bond proceeds fell 15 per cent year on year to US$4.6 billion in the three months from January to March, while ESG loans dropped by a steeper 23.4 per cent to US$10.2 billion. Sustainable finance analysts said corporates and investors might have been more cautious amid current geopolitical and economic uncertainties, with the global pullback on climate action spurred by the US. However, they noted that US President Donald Trump's climate policies may not be the decline's only key driver. 'Increased global scrutiny and debate over ESG in certain markets may be contributing to a more cautious approach among both issuers and investors, although the direct impact on Asean is challenging to directly correlate and quantify,' said Melissa Cheok, associate director at Sustainable Fitch. A maturation within Asean's sustainable finance markets, as well as corporates becoming more aware of greenwashing risks, are other factors as well. A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up ESG bonds The decline in ESG bond proceeds in South-east Asia outpaced the global market, which saw ESG bond proceeds come in at US$234.6 billion in Q1 2025, a 5.9 per cent dip from US$249.3 billion in the same period a year earlier. The Asia-Pacific region bucked the trend, with ESG bond issuances rising to US$47.2 billion, a 12.1 per cent increase from US$42.2 billion over the same period. Within South-east Asia, funding from social and sustainability bonds overtook green bonds, which usually have the highest number of issuances among ESG-labelled bonds. After accessing debt capital markets in the last few years, large corporates in the region are now focusing on deploying and managing proceeds in a way that is aligned with sustainability or climate-related themes and projects, said Cheok. In the meantime, small and medium-sized enterprises are in the early stages of adapting to newly implemented regulatory frameworks; they are also allocating internal resources to build the necessary capacity for compliance and reporting. 'Thus, an ongoing phase of capacity building remains a salient feature of the market landscape,' said Cheok. With expectations that the US central bank might cut interest rates only towards the end of the year, borrowing costs will remain high and may deter some issuers from tapping the market, particularly those with weaker credit profiles or narrower operating margins. Nevertheless, Cheok said that investor demand for ESG debt instruments remain resilient, underpinned by dedicated ESG mandates, evolving regulatory requirements, the focus on transition and the strategic importance of sustainability for both issuers and investors. The top bookrunners for ESG bond deals in South-east Asia over H1 2025 were UBS (US$642.5 million), Morgan Stanley (US$432.7 million) and Deutsche Bank (US$351.4 billion). ESG loans The fall in ESG loan proceeds in South-east Asia was tamer than in the rest of the world. Across the global market, the amount of capital raised from ESG loans fell 47.8 per cent to US$113.1 billion in Q1 2025, from US$216.6 billion in Q1 2024. As for Asia-Pacific, funds from ESG loans came to US$20.4 billion, down 35.1 per cent from US$31.5 billion a year earlier. Aaron Chow, SMBC's head of loan capital markets department in Asia-Pacific, said ESG financing's share of the total loans market has fallen substantially, given that loan issuance volumes in South and South-east Asia were up in Q1 2025 compared to the previous year. He added that companies are adopting a more measured approach towards ESG financing particularly when it comes to setting credible targets in sustainability-linked loans (SLLs), reflecting the growing scrutiny and awareness of greenwashing risks. In addition, price compression observed through 2024 and into Q1 2025 has made SLLs less attractive for lenders, as margins may be further reduced if these targets are met. SLLs are loan instruments that offer borrowers interest rate discounts if they have met pre-determined sustainability- or climate-related targets. Chow added that corporates across Asia-Pacific and South-east Asia remain committed to their long-term ESG goals, although the levels of ambition would vary by market and sector. They are driven by domestic regulatory pressures, stakeholder expectations, and the pursuit of energy security and sustainable development. He expects ESG loan activity in the region to remain robust over the rest of the year, particularly in the areas of energy efficiency, water and social finance. SMBC was the top arranger for ESG loans in South-east Asia across the first three months of 2025, with US$866.7 million raised. Bank of China and ICBC tied for second place, at US$723.4 million each.
Business Times
2 hours ago
- Business Times
Trump tariffs to decimate China profits: analysis
Most of China's industries cannot survive US President Donald Trump's tariffs at current levels, according to a new analysis by Bloomberg Economics (BE). Tariffs now set at roughly 40 per cent compare with average industrial profit margins of about 14.8 per cent in 2024. That gap could prompt more intense price cuts, weakening profits, and – in the worst case – layoffs and potentially a wave of bankruptcies and closures, analysts Chang Shu, David Qu and Maeva Cousin found. Among industries most at risk are textiles, IT and communication equipment and furniture manufacturing. Of 33 industrial sectors that analysts considered, only five have margins that are wider than tariff rates. They include pharmaceuticals, tobacco and oil and gas extraction. 'Some companies with a heavy dependence on the US market may not survive,' economists led by Chang Shu wrote in a research note on Thursday (Jul 17). 'Others will scramble to adapt – accepting lower margins, laying off workers, cutting wages, and potentially flooding the domestic and other foreign markets with cut-price goods.' The findings underscore the economic risks that tariffs pose to the world's second-largest economy at a time when domestic consumption remains sluggish. Trade officials continue to negotiate with US counterparts on a bilateral deal to avoid another escalation in levies; earlier this year, tariffs on China soared to 145 per cent. Data last week underscored the Asian giant's reliance on industrial production and exports to fuel growth. While gross domestic product advanced 5.2 per cent in the second quarter, outpacing analysts' estimates, it was helped by shipment frontloading and manufacturers cutting prices, both of which are tough to sustain. Nearly half of China's industrial sectors rely on overseas markets to absorb 10 per cent or more of their output, the BE analysis found, and the US remains the country's largest single-country trading partner. Elevated tariffs could, in the long run, prompt companies in the US to source goods from other countries, the analysts wrote. To be sure, there are factors that could cushion the blow to China's industry, including exports to other countries in which goods do not face the same trade barriers. Some products may also be absorbed by domestic demand. Some sectors have also cornered the global market, making it difficult or impossible for US firms to find needed items elsewhere. China's government could also step in with additional fiscal support. BLOOMBERG
Business Times
2 hours ago
- Business Times
US dollar weakness drives UK fund out of Treasuries and into gilts
A depreciating US dollar has driven one UK asset manager to reallocate money out of inflation-protected Treasuries and into equivalent British bonds. Across three multi-asset funds worth a total of £1.8 billion (S$3.1 billion), London-based CG Asset Management (CGAM) has switched around £100 million out of US Treasury Inflation Protected Securities (Tips) and into UK inflation-linked government bonds since the end of March. The move to skirt currency risk comes as the US dollar has slumped 7 per cent against the pound this year, with US President Donald Trump's unpredictable tariff policies and a widening deficit dragging on the greenback's appeal. That depreciation now 'weighs a bit on any kind of long unhedged allocation to Tips or US conventional government bonds', portfolio manager Emma Moriarty said in an interview. She has now paused the reallocation as 70 per cent of the portfolios' exposure is sterling, a level 'at the very high end for where this would normally be'. Within CGAM's largest multi-asset fund, the Capital Gearing Trust, the gilt linker portfolio returned 1 per cent over the second quarter whereas the Tips portfolio lost 6 per cent. Since April, Moriarty has grown holdings in UK index-linked bonds from 9 per cent to 15 per cent. While longer maturity gilts have struggled this year given doubts about the UK's finances, Moriarty said so-called linkers have been closing the gap in performance with their American counterparts in their own right. Most linkers have gone from 'uninvestable' to 'good value', Moriarty said. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'In relative terms, the UK is now in a much better position in that UK real yields are now quite elevated,' she added. Still, in both markets, CGAM has shifted out of the short end of the curve after heightened short-term inflation expectations, and also out of the long-end given concerns of an economic slowdown and fiscal risks. Moriarty currently favours maturities between five and 10 years. Historically, CGAM had favoured the US as the 'number one' most valuable inflation market as its outlook for outright real yields was 'really positive' due to expectations that they would track the relatively rapid growth rate of the US economy. But concerns over tariffs and the US dollar have changed that. Moriarty has shrunk holdings in Tips from 28 per cent to 22 per cent in the last three months, with inflation-linked bonds hit particularly hard in April's market turbulence. The reallocation chimes with other investors also shifting money out of US dollar assets and into Europe. 'The biggest threat to the US dollar is actually just this rotation away from US assets,' Moriarty said. BLOOMBERG
