Jerome Powell

U.S. assets whipsawed Wednesday by reports Trump was preparing to fire Powell, with shorter tenors rallying on the prospect that could lead to faster interest-rate cuts.

The recent rally was driven by economic data that reinforced wagers on at least two rate cuts this year, as well as speculation President Donald Trump will name a more dovish successor to Jerome Powell.

Yields across maturities declined, with those on two-year notes falling five basis points and most reaching the lowest level in more than a month.

Some allies of the president have pushed for Treasury Secretary Scott Bessent to get the job, according to people familiar with the matter, a notion that a senior administration official disputed.

Bond investors are on alert for hints on when the Federal Reserve will deliver the two 2025 interest-rate cuts officials projected at their latest policy meeting.

Powell said as policymakers look for more clarity on tariff policies, the risks of higher inflation and unemployment have increased due to President Donald Trump's sweeping levies.

The declines on Thursday pushed two- to 10-year yields higher by at least 10 basis points on the day after President Donald Trump urged people to buy stocks based on the latest trade developments.

With the central bank expected to keep its benchmark rate steady at 4.25%-4.50% on Wednesday, traders will be scrutinizing comments by Fed Chair Jerome Powell.

The pace of hiring drove traders to dial back rate-cut bets that had steadily mounted as Trump's trade war unleashed havoc in financial markets and sowed fears of a US recession.

As President Donald Trump approaches his 100th day in office, he has generated a growing list of unknowns, forcing traders to focus on a broad array of issues beyond just the likely path of interest rates.

At the Oval, Trump didn't respond to a follow-up question from a reporter about whether he was trying to remove him.

US bonds have been whipsawed this month as President Donald Trump's move to impose global tariffs raised threats to the economy, undermining Treasuries' reputation as the world's safest asset.

Bessent reiterated his interpretation of the decline being mainly a product of deleveraging, saying he had no evidence that sovereigns were behind the drop.

The bid for havens also saw traders boosting bets on Fed interest-rate cuts, fully pricing in a quarter-point move by June.

Chair Jerome Powell repeated the central bank is not in a hurry to adjust borrowing costs. Officials can wait for greater clarity on the impact of policies.

The bond market in the past month has been caught between signs that US economic growth is slowing.

Notably, Trump described the January decision to hold rates steady – which looks set to be the Fed's stance for some time — as "the right thing to do."

Long-maturity yields rose as much as four basis points, with the 10-year note's stalling at around 4.53%. A gauge of the dollar held steady after two days of gains.

Strong economic growth coupled with a solid labor market allows officials to wait for further evidence of cooling inflation before adjusting rates again. It also offers them time to evaluate President Donald Trump's policies.

The Federal Reserve is poised to make several key decisions during the year ahead that will impact monetary policy both in the near term and for years to come.