While markets barely blinked when US President Donald Trump said he was going to fire Fed Governor Lisa Cook, the damage may already be done, Wall Street Journal Chief Economics Commentator Greg Ip warned in his weekly — and EnterpriseAM fan favourite — Capital Account column. Analysts cited by Ip say that the attempt — the first of its kind in the Fed’s 111-year history — may be a turning point. If Trump succeeds, he would effectively draw the curtains on the central bank’s independence from presidential control, a principle that has underpinned US monetary policy since 1951.

The markets “are not properly priced for what increasingly seems likely to be a rupture in Fed independence,” Evercore ISI analysts noted. So far, optimism around rate cuts has helped keep stock markets buoyant, driven by Fed Chair Jerome Powell’s recent comments stating that tariffs are unlikely to stoke sustained inflation.

But if the Fed becomes more beholden to political pressure, investors will quickly have to adapt to a very different economic future. Trump’s broader strategy seems aimed at stacking the Fed board with loyalists, with the purpose of letting future rate decisions be informed not just by data, but by campaign cycles, potentially diluting the Fed’s core focus on inflation.

If Cook is successfully replaced off the back of fraud allegations — a topic Trump has a lot of experience in — Trump appointees would hold four of seven governor seats, giving him leverage over monetary policy even without directly removing Fed Chair Jerome Powell. “Once we have a majority, housing is gonna swing and it’s gonna be great,” Trump said on Tuesday.

Trump’s current and prospective Fed nominees are openly political — a major break from past practice. His candidates now signal clear policy stances aligned with his administration. Take Stephen Miran, who, while serving as an investment strategist last year, warned against cutting rates with inflation around 3%. Now, however, as chair of Trump’s Council of Economic Advisers and a contender to Powell, Miran has embraced Trump’s view that rates are too high. Another potential appointee by Trump, former World Bank president David Malpass, has recently written that the Fed should cut rates to support the USD, even though, by his logic, the greenback’s steady decline this year impedes such cuts.

MARKETS THIS MORNING-

Major Asian benchmarks are mostly in the green in early trading this morning, with the Nikkei, Shanghai Composite, and Kospi all in the green, and the Hang Seng in the red, down almost 1%.

ADX

10,182

+0.1% (YTD: +8.1%)

DFM

6,127

+0.4% (YTD: +18.8%)

Nasdaq Dubai UAE20

4,966

+0.3% (YTD: +19.3%)

USD : AED CBUAE

Buy 3.67

Sell 3.67

EIBOR

4.2% o/n

4.2% 1 yr

TASI

10,808

-0.6% (YTD: -10.2%)

EGX30

35,676

+0.9% (YTD: +20.0%)

S&P 500

6,481

+0.2% (YTD: +10.2%)

FTSE 100

9,256

-0.1% (YTD: +13.2%)

Euro Stoxx 50

5,393

+0.2% (YTD: +10.2%)

Brent crude

USD 68.05

+1.2%

Natural gas (Nymex)

USD 2.87

+5.5%

Gold

USD 3,452

+0.1%

BTC

USD 111,203

-0.5% (YTD: +18.9%)

Chimera JP Morgan UAE Bond UCITS ETF

AED 3.55

+1.4% (YTD: +1.9%)

S&P MENA Bond & Sukuk

148.30

-0.1% (YTD: +6.0%)

VIX (Volatility Index)

14.85

+1.6% (YTD: -14.4%)

THE CLOSING BELL-

The DFM rose 0.4% yesterday on turnover of AED 531.2 mn. The index is up 18.8% YTD.

In the green: BHM Capital (+5.2%), Takaful Emarat (+5.2%) and Sukoon Takaful (+5.1%).

In the red: Amanat (-1.8%), Al Salam Sudan (-1.1%) and du (-0.9%).

Over on the ADX, the index rose 0.1% on turnover of AED 888.9 mn. Meanwhile, Nasdaq Dubai was up 0.3%.

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