JPMorgan CEO Jamie Dimon: US Fed will probably reduce rates, but I don't think that's gonna be consequence of the economy

JPMorgan CEO Jamie Dimon: US Fed will probably reduce rates, but I don't think that's gonna be consequence of the economy

Wall Street strategists are increasingly worried about the independence of the Federal Reserve (Fed) as President Donald Trump continues to exert pressure on the central bank. The appointment of Stephen Miran as a close adviser to the Fed and Trump's campaign to oust Governor Lisa Cook have sparked significant concerns among investors and financial professionals.

According to a recent report by JPMorgan Chase & Co., traders are becoming more concerned about the Fed's independence, with evidence pointing to a potential pick-up in inflation . The gold rally and a rotation to value stocks, as well as the widening spread between yields on five- and 30-year Treasuries, indicate that markets are positioning for higher inflation rates. Goldman Sachs Group Inc. also noted that growing concerns over "US institutional credibility risks" could trigger a spike in gold prices .

JPMorgan strategist Nikolaos Panigirtzoglou wrote in a note to clients that "markets have become more concerned over Fed independence" . This concern has been echoed by prominent Wall Street figures such as Jamie Dimon, CEO of JPMorgan, who has emphasized the importance of an independent central bank .

Despite these concerns, the fallout in financial markets has been relatively muted so far. Stocks continue to hit record highs, and traders have increased their wagers on a Fed rate cut, as Trump publicly campaigns for lower borrowing costs and Chair Jerome Powell adopts a more dovish tone .

Goldman Sachs outlined a range of possible outcomes for gold, including a baseline forecast of a surge to $4,000 an ounce by mid-2026, with a so-called tail-risk scenario of $4,500 and an estimate of almost $5,000 if just 1% of the privately-owned US Treasury market were to flow into gold . The JPMorgan team also studied moves across various assets for signs of the "Fed independence trade" playing out in markets, finding evidence of a rotation to value stocks and increased positioning in gold and oil futures .

While the impact of these developments on currency markets has been less pronounced, overall dollar positions have remained largely flat since the Miran announcement .

References:
https://www.fa-mag.com/news/wall-street-strategists-see-more-unease-on-fed-independence-83930.html?section=3