Trump Denies 'Possible Dismissal of Powell Soon'...U.S. Stock Market Rebounds Again

30-year Treasury yield exceeds 5%

President Donald Trump denied reports on the 16th (local time) suggesting an imminent dismissal of Federal Reserve Board Chairman Jerome Powell, which had rapidly spread and caused a sharp downturn in the New York stock market.

According to CNBC, at around 12 a.m. Eastern U.S. time, President Trump said, "It's highly unlikely, and there will be no immediate action." He added, "We have no such plans," but also commented, "Nothing is off the table."

With President Trump's denial of any immediate dismissal, the New York stock market, which had briefly plummeted, rebounded and turned mixed. As of now, the S&P 500 and NASDAQ are fluctuating around 0.1%, while the Dow turned positive. The yield on the 30-year Treasury exceeded 5% immediately after reports about the potential dismissal of Chairman Powell.

Shortly before 12 a.m. Eastern U.S. time, as reports circulated that President Trump would soon dismiss Chairman Powell, the rising S&P 500, NASDAQ, and Dow Jones Industrial Average all plunged by 0.5%~0.6% simultaneously. U.S. Treasury yields, which had been strengthening in the morning with gains of 3 to 4 basis points (1bp=0.01%), also reversed direction, with the 30-year yield surpassing 5%.

Prior to this, a White House official told U.S. media outlets including Bloomberg and CNBC that President Trump had mentioned to Republican lawmakers his intention to dismiss Chairman Powell. The official said, "The President asked Republican lawmakers for their opinions on dismissing Chairman Powell, and they expressed their support." However, in an interview with CNBC, this official added that it does not appear the dismissal of Chairman Powell is imminent.

Separately, The New York Times reported that President Trump presented a letter to lawmakers at the meeting regarding Powell's dismissal.

Despite denying any immediate dismissal of Chairman Powell, President Trump has continued to suggest such action in recent months, demanding that the Federal Reserve lower interest rates. In recent weeks, he increased his criticism of Chairman Powell, mentioned the costs of renovating the Fed building, and again referenced dismissal.

Earlier this month, Powell confirmed that, were it not for tariffs imposed by the Trump administration, the central bank would already have cut interest rates. Powell stated, "We assessed tariff volumes and postponed policy changes; tariffs have significantly raised most inflation expectations in the U.S."

Steve Sosnick of Interactive Brokers commented, "Since Trump said he has no 'plans' to fire Powell, I suspect the initial reports of an imminent dismissal were trial balloons to gauge market reactions."

Peter Tchir of Academy Securities claimed that Trump has become bolder after a series of "victories," including passing the OBBB Act and winning a lawsuit over the International Court of Justice's injunction on bilateral relations.

By Guest Reporter Jung-a Kim kja@hankyung.com