Good morning, traders,
Things are about to blow up between the White House and the Fed.
On Monday, Treasury Secretary Scott Bessent said the entire Federal Reserve should be reviewed to determine whether it’s actually done its job.
And if that wasn’t enough, he added that firing Fed Chair Jerome Powell should be a decision made by the president.
That’s not some offhand comment. That’s a shot across the bow.
And the timing couldn’t be more aggressive — Powell is scheduled to speak this morning at a major banking conference.
If Bessent wanted to rattle the Fed chair right before a big public appearance, mission accomplished.
Now look, this isn’t just about politics or who gets to pull the levers of monetary policy.
If you’re trading this market, you’ve got to realize the gloves are coming off.
This kind of public pressure on the Fed creates uncertainty. Markets hate uncertainty.
That alone can cause volatility. And if Powell hints at any tension in this morning’s remarks, it could shake up bonds, the dollar, equities — all of it.
So if you’re holding positions, hedging with options, or looking to enter a new trade, this week just got a lot more important.
Because Powell isn’t the only one onstage.
Indicators Galore
We’ve got a stacked calendar for economic data:
- Existing home sales come in Wednesday
- Manufacturing PMI and new home sales hit Thursday
- Durable goods orders close out the week Friday
That’s a full suite of data across housing, manufacturing, and consumer demand, which means it’s going to hit nearly every sector one way or another.
And in a normal week, these reports would be the main event.
But with Powell under public fire from the Treasury Secretary, any surprise in these numbers could now get amplified.
Let’s say Thursday’s new home sales come in stronger than expected.
That could give the Fed a little more confidence that the economy isn’t slowing as much as feared, which means they might delay cuts.
But if Powell also feels pressure to look “independent,” he might double down on his hawkish tone just to prove he’s not taking orders from the White House.
That’s the danger here — it’s not just about the data anymore. It’s about how the Fed reacts under pressure.
And don’t forget: Markets have been pricing in rate cuts.
If Powell walks that back, even subtly, stocks could pull back, yields could spike, and the dollar might rally.
That’s where traders can get caught off guard — or make a killing if they’re positioned right.
So What’s the Move?
Personally, I’m watching for any sign of Powell hedging his language today.
If he says anything about “monitoring” political developments or “evaluating” independence, that’s a red flag.
He might not say it outright — but body language, tone, even what he doesn’t say could move markets.
And from a trade setup perspective?
Volatility could pick up fast, so keep an eye on the VIX.
The battle between fiscal and monetary leadership just got a lot more public. And markets aren’t ready for it.
I’ve traded through plenty of Fed showdowns, and I can tell you that when politics creeps into monetary policy, the market stops acting rational.
It reacts to fear.
So stay sharp, stay hedged, and most of all, don’t assume anyone’s in control.
Stay street smart,
Jeff Zananiri
P.S. Want to up your trading game?
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