The trading day ended with Wall Street in the green, and the dollar and short-dated Treasury yields lower after Trump denied reports of firing Fed Chair Powell. Trump’s call for 300 basis points of rate cuts raises questions about Fed policy. Market moves include falling yields, a steepening yield curve, rising small caps, and a weaker dollar.

Amid Trump’s verbal attacks on Powell, reports suggested Powell’s imminent firing, causing market reactions. Trump denied the report, but the desire for lower rates persists. Rates traders expect no change this month and a quarter point cut by October. Wall Street indices stayed positive, but the possibility of a correction looms.

Trump’s extreme call for a 300 basis point rate cut challenges Fed policy. Economic indicators suggest the fed funds rate may be too high, but inflation remains above target. The president’s push for lower rates may impact monetary policy, with experts questioning the appropriate rate level amid market uncertainty.

The Fed’s stance on rates and Trump’s pressure create uncertainty in markets. Powell’s claims of a modestly restrictive policy signal potential rate cuts, but the Fed remains cautious. The clash between political pressure and economic indicators may lead to compromise, highlighting the delicate balance between monetary policy and external influences.

Read more at Yahoo Finance: Trump-Powell drama sizzles, dollar fizzles