Core Viewpoint - The independence of the Federal Reserve is facing unprecedented challenges due to ongoing pressure from Trump on Chairman Powell, leading to a reassessment of the central bank's policy outlook in the market. However, JPMorgan believes there is no need for excessive concern [1][2]. Group 1: Political Pressure on the Federal Reserve - JPMorgan's Ilan Benhamou noted that the Federal Reserve has historically operated under political pressure, not just during Trump's presidency [2]. - The potential dismissal of Powell is less significant than the fact that his term is nearing its end, with increasing dovish sentiment expected to drive the market, particularly in the context of anticipated interest rate cuts [2][6]. Group 2: Market Reactions and Predictions - Trump's drafting of a letter to dismiss Powell initially caused a drop in U.S. stocks and the dollar, but the market quickly reversed after Trump denied the intention to fire Powell [3]. - JPMorgan recommends continuing to buy the S&P 500 and VIX indices, anticipating increased investment in risk assets like cryptocurrencies and AI, while acknowledging that tariffs, inflation, and Fed policy uncertainties will heighten market volatility [3][6]. Group 3: Historical Context and Independence Myth - Benhamou emphasized that the current situation reflects a long-standing issue, citing historical conflicts between past presidents and Fed chairs, such as President Johnson's pressure on Chairman Martin in 1965 [4]. - The notion of the Federal Reserve's independence is described as a "myth," with significant figures from major Wall Street firms advocating for the Fed's operational independence from political influence [5]. Group 4: Legal Implications of Dismissing Powell - The Federal Reserve Act allows for the dismissal of board members, including the chairman, "for cause," with Trump and allies suggesting potential reasons for Powell's dismissal [9]. - If Powell were to be dismissed, he could immediately file for an injunction to restore his position, but if denied, the vice chairman would assume the role [9]. Group 5: Supreme Court's Stance - The Supreme Court previously ruled that Trump could not dismiss Powell without cause, recognizing the Fed as a "uniquely structured quasi-private entity," but left open the possibility for "for cause" dismissals [10]. - Legal experts suggest that even if the court finds a dismissal unlawful, it remains uncertain whether Powell could retain his position due to the court's limitations on providing "equitable relief" [10].

Group 1: International Gold Market - On Thursday, international gold prices fluctuated and closed lower, opening at $3347.41 per ounce, reaching a high of $3352.25, and a low of $3309.57, ultimately closing at $3338.85 per ounce [1][9] - COMEX gold futures closed at $3345.40 per ounce [9] - The SPDR gold ETF holdings stood at 948.5 tons, indicating a significant investment in gold [10][11] Group 2: Currency and Monetary Policy - The onshore RMB closed at 7.1796 against the USD, a decrease of 20 basis points from the previous trading day, while the USD index rose by 0.36% to 98.6419 [1][16] - The central bank conducted a 7-day reverse repurchase operation of 450.5 billion yuan, with a net injection of 360.5 billion yuan after 90 billion yuan matured [11] Group 3: Economic Data and Employment - In June, US retail sales increased by 0.6%, surpassing market expectations of 0.1%, and rebounding from a previous decline of 0.9%, indicating strong consumer spending [1][17] - Initial jobless claims in the US decreased by 7,000 to 221,000, marking the lowest level since mid-April and reflecting resilience in the labor market [1][17] Group 4: Market Reactions and Concerns - Following the release of retail sales data, international gold prices quickly dropped, briefly falling below the $3310 mark before recovering some losses [1][17] - Concerns have been raised by executives from major US financial institutions regarding the independence of the Federal Reserve, suggesting that political interference could severely disrupt global capital markets [1][17]

Report Summary 1) Report Industry Investment Rating No information provided. 2) Core View of the Report The overnight economic data in the US showed an overall improvement. The better - than - expected retail data in June and the decline in the weekly initial jobless claims drove the short - term strengthening of the US dollar and US stocks, putting pressure on precious metals, which are expected to maintain a short - term volatile trend. Gold maintains a long - term bullish trend, and silver retains a medium - term bullish view with cautious consideration of its elasticity. Attention should be paid to the new round of trade game in the first half of August and the change in interest - rate cut expectations brought by the global central bank meeting in the second half of August, as well as the trading interference from the "shadow Fed chairman" in the second half of the year. The weekly COMEX gold is expected to be in the range of [3250, 3450], and COMEX silver in the range of [36, 40] [1][3]. 3) Summary by Related Catalogs Key Information - US retail sales in June increased by 0.6% month - on - month, the highest since March this year, with an expected increase of 0.1% and a previous decrease of 0.9%. Core retail sales increased by 0.5% month - on - month, with an expected increase of 0.3% and a previous decrease (revised) of 0.2% [2]. - The number of initial jobless claims in the US last week was 221,000, with an expected 235,000. The four - week average was 229,500. The number of continued jobless claims as of the week ending July 5 was 1.956 million [2]. - US President Trump said he has no plan to fire Fed Chairman Powell unless fraud is proven. He also said he would accept Powell's resignation if Powell wants to [2]. - The Fed's latest Beige Book showed that economic activity in the US slightly rebounded from June to July. Import tariffs pushed up costs, and inflation may accelerate by the end of summer. Employment slightly increased, but companies were more cautious in hiring and lay - off decisions. The Fed's policy rate remained unchanged, and most officials were waiting to observe the impact of trade policies and inflation trends [2]. Price Logic The market had short - term fluctuations around the issue of Powell's possible dismissal. After Trump denied the dismissal rumor, market sentiment subsided. The overall improvement in US economic data drove the short - term strengthening of the US dollar and US stocks, putting pressure on precious metals, which maintained a short - term volatile trend. Long - term gold is bullish, and medium - term silver is also bullish with cautious consideration of its elasticity [3]. Outlook The weekly COMEX gold is expected to be in the range of [3250, 3450], and COMEX silver in the range of [36, 40] [3].

Core Viewpoint - The escalating political tension between President Trump and Federal Reserve Chairman Powell is undermining investor confidence, with analysts warning that any attack on the independence of the central bank could lead to a surge in gold prices [2][3]. Group 1: Political Tension and Market Impact - Trump has openly expressed dissatisfaction with Powell, advocating for a rapid interest rate cut of 300 basis points, which would place the federal funds rate between 1.25% and 1.50% [2]. - Recent personal attacks from Trump on Powell have intensified, with derogatory remarks and rumors about Powell considering resignation being circulated [2]. - The uncertainty surrounding the Federal Reserve's leadership is injecting new volatility into the markets, with concerns about the central bank's independence worsening the situation [2][3]. Group 2: Consequences of Loss of Independence - Analysts describe the independence of the Federal Reserve as its "superpower," warning that attacks on this independence could have dramatic consequences, including a potential collapse of the dollar and U.S. Treasury bonds [3]. - The loss of credibility for the Federal Reserve would undermine its ability to support turbulent financial markets through the purchase of U.S. government bonds, which is based on its reputation [3][4]. - The example of Turkey's central bank losing credibility due to political interference is cited as a warning for U.S. investors, suggesting that similar outcomes could benefit gold [4]. Group 3: Gold as a Safe Haven - Analysts recommend that investors focus on safe-haven assets like gold, especially as the Federal Reserve may take significant actions in the fall [3][4]. - Increased political tension could lead to heightened market volatility, with gold likely being used more as a store of value during such times [5]. - If Trump follows through on threats to dismiss Powell, it could unexpectedly drive demand for gold, putting pressure on the dollar index [5]. Group 4: Central Bank Demand for Gold - Despite increased investment demand for gold this year, central bank demand remains a key factor behind the historic rise in gold prices over the past three years, with expectations of an additional 1,000 tons of gold reserves being added globally [6]. - Analysts suggest that the establishment of a "shadow chairman" in the Federal Reserve could dilute monetary policy guidance, complicating the management of market expectations [6].

Core Viewpoint - The article discusses the ongoing pressure from the Trump administration on Federal Reserve Chairman Jerome Powell, highlighting concerns about the independence of the Federal Reserve and its implications for the financial markets and the economy [1][2]. Group 1: Pressure on Federal Reserve - The Trump administration has initiated a formal process to select the next Federal Reserve Chairman, with Treasury Secretary Mnuchin indicating that this will proceed at Trump's pace [2] - There are speculations about whether Trump will seek to dismiss Powell before his term ends, although Trump has stated it is "unlikely" unless there are issues of fraud [2][6] - The independence of the Federal Reserve is crucial for maintaining market stability, as emphasized by the CEOs of major Wall Street banks [3][4]. Group 2: Wall Street's Response - Jamie Dimon, CEO of JPMorgan Chase, was the first major financial institution leader to publicly defend the independence of the Federal Reserve, warning that political pressure could have negative consequences [3] - Other CEOs from Goldman Sachs, Bank of America, and Citigroup echoed similar sentiments, stressing the importance of the Fed's independence for the U.S. economy and global financial markets [4]. Group 3: Historical Context and Implications - The concept of central bank independence dates back to the 1951 Treasury-Fed Accord, which allowed the Fed to set interest rates without political pressure [6] - Historical attempts by politicians to influence the Fed, such as Nixon's pressure on Chairman Burns, resulted in severe economic consequences, including runaway inflation [6]. - Even if Powell were to be removed as Chairman, his term as a board member would continue until January 2028, limiting Trump's ability to fully replace him [6]. Group 4: Federal Reserve's Decision-Making Structure - The Federal Open Market Committee (FOMC) is responsible for monetary policy decisions, and currently, only two members support immediate rate cuts, indicating a lack of consensus [7]. - Powell's ability to build consensus within the FOMC is noted as a significant strength, which is essential for effective leadership [7].

Group 1 - The discussion regarding Powell's position has subsided, but concerns about the independence of the Federal Reserve remain prevalent in the market and investment community [1][5][6] - Recent strong economic data, including rising retail sales and declining unemployment claims, have led to a positive outlook for U.S. corporate earnings, reducing the likelihood of an interest rate cut in July [2][3] - The Federal Reserve is undergoing a significant renovation of its buildings, which has drawn criticism regarding rising costs and has been linked to discussions about Powell's potential dismissal [3][4] Group 2 - The independence of the Federal Reserve is legally protected, and the President cannot dismiss the Fed Chair without just cause, despite political pressures for rate cuts [4][5] - The U.S. government is under pressure to manage its substantial debt, with rising bond yields exacerbating concerns about fiscal sustainability [4][5] - Powell's commitment to maintaining a 2% inflation target and full employment reflects a stable policy approach, which is crucial for market expectations [5][6]

Core Viewpoint - The independence of the Federal Reserve, particularly under Chairman Powell, is under scrutiny due to political pressures, but legal and institutional frameworks provide significant protection against arbitrary dismissal [1][2]. Legal Protections for Powell - According to Morgan Stanley economist Michael Feroli, the Federal Reserve Board members can only be removed for "just cause," historically interpreted as misconduct rather than policy disagreements [2]. - The 1935 Supreme Court case Humphrey's Executor v. United States established that the President cannot dismiss independent regulatory agency heads due to political differences, which has historically protected the Federal Reserve from direct political interference [2]. - The recent Supreme Court ruling in Trump v. Wilcox further solidified the Federal Reserve's unique status, stating it is a "structurally unique quasi-private entity," thus providing additional legal safeguards for its members against arbitrary dismissal [2]. Challenges to Dismissal - Even if President Trump attempts to dismiss Powell citing "just cause," such as cost overruns on the Fed's headquarters renovation, historical precedents make it difficult to define what constitutes "just cause," potentially leading to lengthy legal battles [3]. - If Trump were to proceed with the dismissal, Powell could file a lawsuit to block the action, which might ultimately reach the Supreme Court [3]. - Analysts suggest that the Supreme Court may allow lower court injunctions to remain in effect during the case, potentially allowing Powell to complete his term [3]. Institutional Design Limits Presidential Influence - The Federal Open Market Committee (FOMC) consists of 12 members, which disperses decision-making power and makes it challenging for any single change in personnel to significantly alter policy direction [3]. - The seven Board members are nominated by the President and confirmed by the Senate for 14-year terms, while the Chair and Vice Chair serve 4-year terms, renewable. Powell's term as a Board member lasts until January 2028, and as Chair until May 2026 [3][4]. Continuity in Monetary Policy - Even if Powell were to lose his position as Chair, he could remain on the Board until January 2028 and potentially be elected as Chair of the FOMC, maintaining a significant role in monetary policy formulation [5]. - The current term arrangements for Board members limit the President's ability to influence the composition of the Federal Reserve through normal appointments [6]. Risks of Eroding Independence - Economists generally agree that separating monetary policy from political cycles is beneficial, as politically motivated decisions can lead to inappropriate economic stimulation [7]. - Historical evidence suggests that central banks with greater political independence tend to achieve lower and more stable inflation rates [7]. - Any weakening of the Federal Reserve's independence could increase inflation risks, especially given current pressures from tariffs and rising inflation expectations [7].

Core Viewpoint - The President of the German Central Bank, Nagel, expressed concerns that challenges to the independence of the Federal Reserve may exceed their immediate impact [1] Group 1 - Nagel highlighted the importance of central bank independence in maintaining economic stability and effective monetary policy [1] - He indicated that any perceived threats to the Federal Reserve's autonomy could have broader implications for global financial markets [1] - The comments reflect ongoing discussions about the balance between political influence and central bank operations in the U.S. [1]

Group 1: Economic Outlook - The expectation is that U.S. inflation will rebound in Q3 2025, while the economy continues to weaken[2] - The Federal Reserve's difficulty in lowering interest rates is increasing despite economic downturns[3] - The dollar index is projected to break 100 in Q2 and Q3 2025, with gold identified as a key asset below $3000 per ounce[3] Group 2: Federal Reserve Independence - The Federal Reserve's independence has been historically challenged, particularly during the World War II and Korean War periods, leading to inflation pressures[4] - The 1951 Treasury-Fed Accord marked a significant shift, establishing the Fed's independence in monetary policy[5] - Recent attempts by President Trump to influence the Fed's independence echo past governmental pressures, raising concerns about potential market impacts[7][12] Group 3: Historical Context - The Fed's establishment in 1913 did not prevent bank failures during the Great Depression, with one-third of banks closing by 1933[4] - The Fed's role evolved post-World War II, initially supporting government financing through low interest rates, which later contributed to inflation exceeding 20%[8][17] - The appointment of William McChesney Martin as Fed Chairman in 1951 was pivotal in asserting the Fed's independence against governmental pressures[10] Group 4: Risks and Implications - If the Fed loses its independence, the U.S. could face severe market repercussions, including stock, bond, and currency declines[12] - The potential for uncontrolled inflation could arise from aggressive monetary policy changes, leading to significant asset volatility[14]

Core Viewpoint - The financial markets experienced unexpected volatility due to rumors of President Trump planning to dismiss Federal Reserve Chairman Jerome Powell, which were later denied by Trump, leading to a quick market recovery [1][3]. Group 1: Market Reactions - Following the rumors of Powell's potential dismissal, U.S. stock markets retreated from record highs, gold prices increased amid uncertainty, and the dollar experienced a sharp decline [3]. - The market's initial reaction indicated concerns over Trump's potential actions against Powell, but the volatility was contained as many believed the likelihood of such actions was low [3]. Group 2: Risks and Predictions - Deutsche Bank reported that the risk of Powell's dismissal is underestimated, predicting that if Trump forces Powell out, the trade-weighted dollar could drop by 3% to 4% within 24 hours, and fixed-income products could face a sell-off of 30 to 40 basis points [5]. - Analysts warned that if Trump were to dismiss Powell, it could undermine the independence of the Federal Reserve, leading to significant market turmoil, particularly in the bond market [5]. Group 3: Trump and Powell's Relationship - Trump has consistently criticized Powell, expressing dissatisfaction with the Fed's interest rate policies and advocating for a reduction of the benchmark rate by up to 3 percentage points [7]. - Some government officials believe that Powell's handling of certain Fed matters could provide Trump with a legal basis to dismiss him, although this remains contentious [7]. Group 4: Legal Implications - Powell's term as chairman ends in May 2026, and he has stated he would not resign if asked by Trump, emphasizing the Fed's independence [9]. - Legal experts suggest that Trump may not have the authority to dismiss Powell without cause, referencing a Supreme Court ruling that could protect the Fed from such actions [9].