Why are markets so calm in the face of seismic change at the Fed? Normally, the removal of a Federal Reserve governor—let alone the political brawl now unfolding over President Trump’s attempt to oust Lisa Cook—would set Wall Street on edge. Yet investors seem to be whistling past the graveyard. US stocks and bonds barely flinched, and the S&P 500 is still tracking a 2% gain for August as rate cut hopes keep optimism alive.
Even in Europe, political turmoil is having more impact: French markets slumped up to 2% on fears of a government collapse and rising debt costs. Still, the bigger surprise may be the market’s complacency about central bank independence. It’s a calculated bet that legal guardrails—and eventual rate cuts—will outweigh governance risks, at least for now.
