Investors salivate the rate reductions while Trump’s attempt to fire Lisa Cook opens the door to a majority of GOP Fed: “ it’s very positive ”

“It’s very positive,” said Jay Hatfield, CEO of Capital Advisors infrastructure, Fortune. “The simple way of saying that the elimination of the Fed’s incompetence is much more important than defending the alleged independence of the Fed. The Fed has always been political; it is only Trump who speaks in public.”

Indeed, the markets largely increased the shoulders of the announcement, to the perplexity of certain economic experts: Robin Wigglesworth of FT Alphaville argued that the markets are “absurdly blood”.

“The rooted expectations of institutional integrity are now Kaput,” wrote Wigglesworth.

The S&P 500 and Dow exchanged around the flat line on Tuesday morning, while the Nasdaq even won 0.3%. The long -term treasure yields increased after Trump’s move, while short -term yields have slipped, reducing the curve, which indicates that investors are Paris levels can drop in the short term but derive higher if a politicized Fed is less attentive to inflation. The US dollar index fell 0.3%.

For Hatfield, that’s the point. He argued that the Fed is already too tight, the seated policy rates “at 150 base points above the neutral”, which means that monetary policy limits growth more than it should.

“If the federal funds were 3% and the president was putting pressure for large cuts, it would be dangerous,” he said. “But we are far from that.”

Trump has already appointed Stephen Miran to the Fed board of directors after a governor decided to resign earlier this month, so the replacement of Cook would give him a fourth votes alongside the previous people Michelle Bowman and Christopher Waller. This would incline the board of directors of seven members towards a majority of republican.

The prospect of a Board of Directors of the Republican Fed is one of the reasons why Hatfield thinks that the cuts are coming.

“A price is like a single tax-it appears in CPI once and then disappears,” he said.

Waller and Bowman, who both dissident in last month’s decision to keep stable rates, understand that prices are not a persistent inflation driver, Hatfield added. On the other hand, the governors appointed by the Democrats misunderstood that, making them “delay reductions and put the economy in danger”.

“So getting rid of the Powell Fed is very positive for the stock market and the bond market,” he said.

In the short term, Hatfield is expecting at least two cups this year, echoing the president of the Fed, Jerome Powell, the recent signals Dovish.

“At night, you have seen an instinctive sale in bonds, but if we want to get cuts, it’s great for bonds and ideal for stocks,” he said.

Risk independence, with only fragile market railings

Other economic experts are much less optimistic. David Wessel de Brookings warned that Trump “seems determined to control the Fed – and will use all leverage that he has a majority”, calling for another step to undermine democratic foundations.

Analysts of the Piper Sandler investment bank were also direct, arguing that investors are wrong if they think that the markets will discipline Trump.

“What is the basis to believe that the so-called bond vigilants rumble the congress before a crisis is at hand?” They wrote, stressing that the markets did not provide for the inflation shock of 2022 or the housing bust before the global financial crisis. Instead, they argued that actions are simply rallying at the prospect of rate reductions, “even if they can be partly due to political pressure.”

The greatest risk that analysts point is structural. As analyst Jim Bianco explained it on X, the seven governors of the Fed must reappear – or veto – all 12 regional presidents of the Federal Bank of the reserve at the reserve, at the end of their five -year mandates in February 2026.

With more people appointed by Trump to the board of directors, even leaders like Austan Goolsbee in Chicago or John Williams in New York could find their jobs in danger, reshaping the balance of the FOMC.

Piper Sandler warned that “the pillars of the long bull market are removed one by one”, with a more discouraged free trade and “the pillar of sound of sound fundamentally compromised”. The market, he concluded, is unlikely to serve as control over the politicization of the Fed.

For the moment, the markets are focused on short -term relaxation.

The global Wealth Management global strategist Ulrike Hoffmann-Burchardi told customers that his team still expects the Fed to deliver 100 base points during the next four meetings.

“We will continue to monitor the growing political pressure on the Fed,” she wrote in a note, “but expect her decision-making remains guided by her short-term mandate.”

Hatfield, for his part, does not care what he calls “alleged independence”.

“Inflation is already contained, the job market is weakening and we are heading to the recession,” he said. “The real story is not Trump against the Fed – is that the Fed has been incompetent for decades, and the markets know it. Any step towards the repair is positive.”