Why aren’t investors panicking as Trump targets the Fed? Despite the unprecedented move to fire Fed governor Lisa Cook and plans to stack the central bank with rate-cutting loyalists, Wall Street is—surprisingly—keeping calm.
Equities remain near all-time highs: the S&P 500 closed at a record before a cautious post-earnings dip in Nvidia. Treasury yields, though up slightly, haven’t spiked dramatically. The dollar dipped on the Fed news but quickly recovered—a far cry from previous Fed-related selloffs.
So, what's driving this market nonchalance?
- Investors have profited from “betting Trump will back off” before—until proven otherwise, why panic now?
- Markets expect short-term rate cuts, but don’t yet believe in long-term crisis—even as long-term uncertainties mount
- Corporate earnings, especially in AI and tech, are holding up—distracting from institutional risks
Could this market complacency backfire? If the Fed’s credibility erodes further, we could see abrupt swings in rates, the dollar, and equities. For now, it’s business as usual—but the clock is ticking.
