Good Monday AM from your Hometown Lender,

Not much data today and most markets around the world were closed for Easter Monday.

Here at home, markets are struggling yet again. Equities are getting hit hard as are bonds with the 10-yr back to 4.40%. There is more pressure on mortgage rates. Most of it on the back of President Trump ramping up attacks on Fed Chairman Powell, demanding ‘loser’ Fed chair lower rates ‘NOW’. Unfortunately, there now exists the possibility that Trump’s attack on Powell will erode the central bank’s long-standing independence from political pressure. 

While legal scholars say that a president can’t dismiss a Fed chair easily and Powell has said he wouldn’t resign if asked by Trump, the latest comments coming from the White House are forcing investors to reckon with the implications of Powell’s dismissal. 

If the credibility of the Fed is called into question, it could severely erode confidence in the dollar.

On Friday, National Economic Council Director Kevin Hassett said Trump was studying whether he’s able to fire Powell. The comments came a day after the president publicly criticized the head of the central bank for not moving fast enough to slash interest rates. Trump has been asking those around him about the possibility of removing the Fed chair, according to people familiar with the matter. 

On the heels of eroding market confidence, hedge funds are now the least bullish on the greenback since October, Commodity Futures Trading Commission aggregated data showed. While headlines on Powell are certainly not helping sentiment, others say the worsening global trade war will likely continue to be the dominant driver on dollar trading. 

“We believe dollar weakness will continue,” wrote Win Thin, global head of markets strategy at Brown Brothers Harriman. “The attack on Fed independence is intensifying. The admission that this is being studied at all should be taken very seriously and very negatively.”

Stay safe and make today great!