Core Viewpoint - The rumor of Trump potentially firing Fed Chair Powell caused significant market turmoil, highlighting the latent tail risk associated with such a scenario [1] Market Reaction - The rumor led to a sharp reaction in global financial markets, with the euro/dollar briefly surpassing the 1.1700 mark and a notable drop in two-year Treasury yields, steepening the yield curve [1] - The market quickly reverted after Trump's statement of "unlikely," indicating a temporary panic rather than a fundamental shift [1][2] Economic Indicators - Despite the initial panic, the market did not significantly increase rate cut expectations, with the euro/dollar failing to break key resistance levels [2] - The focus shifted back to macroeconomic fundamentals, with weak PPI data and a CPI anchor suggesting inflation is not low enough to warrant a full pivot to easing by the Fed [2] Future Market Focus - Attention is now on upcoming retail sales and TIC data, which are crucial for assessing foreign interest in U.S. Treasuries [2] - A potential decline in foreign holdings of U.S. debt could support a bearish narrative for the dollar, but until then, the market is expected to consolidate [2] Euro/Dollar Dynamics - The euro/dollar remains around the low 1.16 range, caught between the unlikely Powell scenario and a lack of sufficient delivery on the ambitious EU budget plan [3] - The current market environment is characterized by geopolitical uncertainty, with headlines generating interest but lacking clear direction [3]