UBS(US:UBS) Zhi Tong Cai Jing·2025-08-18 06:53Group 1 - Concerns about the independence of the Federal Reserve have been raised due to President Trump's criticism of its interest rate cuts, which could lead to increased risk premiums on U.S. Treasury bonds and weaken confidence in the dollar [1][2] - UBS predicts that the Federal Reserve will lower interest rates by 100 basis points by June 2026, driven by labor market and inflation data rather than political pressure [1][2] - Trump's dissatisfaction with the Federal Reserve's pace of rate cuts has heightened uncertainty regarding its leadership and policy direction, although UBS believes a direct challenge to the Fed's autonomy is unlikely [1][2] Group 2 - If the Federal Reserve Chair were to be dismissed, it could trigger significant market reactions and raise questions about the long-term credibility of U.S. monetary policy [3] - UBS maintains that high-quality bonds, including U.S. Treasuries, remain attractive investments despite concerns over the Fed's independence, as they offer stable returns in a potentially declining interest rate environment [2][3] - The historical context of the Federal Reserve's independence, established by the 1951 Treasury-Fed Agreement, suggests that political challenges to its autonomy have not succeeded in the past [2]