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Fed setting policy based on a president's will can badly hurt U.S. dollar: Damped Spring's Constan
CNBC Televisionยท2025-07-16 22:08

Federal Reserve Policy & Presidential Influence - The President desires lower interest rates and expects the Federal Reserve (Fed) to align with his objectives, despite potential conflicts with sound monetary policy [1][2] - The President might replace the Fed chair with a more dovish nominee to achieve his desired policy outcomes [2] - A Fed that prioritizes the President's agenda over its independence could negatively impact the dollar's value due to concerns about biased policy and currency debasement [3] Potential Treasury Actions - The President may instruct the Treasury to intervene in the bond market to suppress long-term yields [4] - The Treasury could reduce long-term bond issuance by 25%, which would have a similar impact to the Fed's largest monthly quantitative easing (QE) program [5] - Decreasing bond supply could keep yields low, but might also lead to inflation and accelerated economic growth [7] Market Implications - Actions to control bond yields could lead to rallies in stocks, gold, and Bitcoin, potentially weakening the dollar [6] - Starving the market for duration through reduced bond supply could maintain low yields if demand for Treasury bonds remains strong [7]