Trump denies firing Powell, hints at justification; EU unveils $84 billion countermeasure list.
Trump Drafts Letter to Dismiss Powell, Denies Rumors but Hints at Justifiable Reasons
Background on Powell's Potential Dismissal
Former President Trump has reportedly inquired with Republican lawmakers about the possibility of dismissing Federal Reserve Chairman Jerome Powell. Florida Republican Representative Anna Paulina Luna stated on X platform that she has reliable information about Powell's impending dismissal. Following this, it was reported that Powell would be interviewed on Wednesday, and Trump had drafted a dismissal letter.
Market Reactions
After the news broke, U.S. Treasury yields, gold, and Bitcoin prices rose, while U.S. stocks and the dollar fell. Trump later clarified that he does not currently plan to dismiss Powell but suggested that "justifiable reasons" could be considered. Analysts express concern that if Trump were to proceed with the dismissal, the current 5% yield could become a bottom for the 10-year Treasury bonds.
Ongoing Stalemate on Cryptocurrency Legislation
Legislative Developments
After a meeting with Trump and last-minute negotiations with House leadership, hardline lawmakers have made progress on cryptocurrency legislation. They have agreed to merge the CLARITY Act, which focuses on market structure, with a bill banning central bank digital currencies (CBDCs). However, this has caused dissatisfaction among committee members who fear that combining the two bills could jeopardize their passage.
EU's Countermeasures Against U.S. Tariffs
New Tariff Proposals
In response to U.S. tariffs on EU goods, the European Commission has prepared a countermeasure list worth €72 billion (approximately $84 billion). This list includes high-value items such as U.S.-made airplanes and whiskey. Trump has previously warned that if the EU imposes tariffs, the U.S. will retaliate with 200% tariffs on EU alcoholic products.
EU's Budget Plan and Challenges Ahead
Proposed Budget
The EU has proposed a nearly €2 trillion ($2.3 trillion) seven-year budget plan to address various challenges, including increased defense needs and global economic competition. This budget represents a significant increase from the previous cycle and may face opposition from member states struggling with their own budget issues.
U.S. Stock Market Update
Market Performance
Amid the "dismiss Powell" drama, U.S. stock markets experienced brief volatility but ultimately closed slightly higher. The S&P 500 rose by 0.32%, the Nasdaq by 0.25%, and the Dow Jones by 0.53%. Major tech stocks had mixed performances, with Apple up 0.5% and Amazon down 1.4%.
Notable Stock Movements
- Circle surged 19.39% following a procedural vote on cryptocurrency legislation.
- MP Materials dropped over 5% after announcing a stock offering.
- Tesla's stock rose over 3% with the introduction of the six-seat Model Y.
Upcoming Economic Data and Events
Key Releases
On Thursday, the U.S. will release June retail sales data and initial jobless claims. Additionally, TSMC and PepsiCo are set to report earnings, with Netflix releasing its results after market close.
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