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Short-term Treasury yields fall, while long-term yields rise after Trump orders removal of Fed's Cook

1. Treasury yield curve steepened; short-term yields fell while long-term yields rose. 2. Trump's firing of Fed Governor Lisa Cook raised concerns about Fed's independence. 3. Investors anticipate lower short-term rates and higher long-term rates due to political actions. 4. Stronger than expected economic reports may influence Fed's rate decisions ahead. 5. Dollar declined against currencies amid shifting investor expectations on rates.

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FAQ

Why Bearish?

The uncertainty surrounding the Fed's leadership could lead to volatility, similar to historical instances like the 2016 election period when the market wavered due to political changes.

How important is it?

The potential shift in Fed policy can disrupt borrowing costs, directly impacting corporate profitability and market sentiment, crucial for S&P 500 valuations.

Why Short Term?

Immediate market reactions to federal leadership changes often exhibit transient effects, as seen post-2016 elections before stabilizing as policies take shape.

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