Court Rules Lisa Cook Can Remain a Fed Governor While Fighting Trump’s Attempt to Fire Her

Economic

Summary:

A federal judge ruled that Federal Reserve Governor Lisa Cook can remain in her role while challenging President Trump’s attempt to fire her over alleged mortgage fraud.

A federal court has ruled that embattled Federal Reserve Gov. Lisa Cook can remain in her position while she fights President Donald Trump’s efforts to fire her.

The ruling, which will almost certainly be appealed, is a blow to the Trump administration’s efforts to assert more control over the traditionally independent Fed, which sets short-term interest rates to achieve its congressionally mandated goals of stable prices and maximum employment. Congress has also sought to insulate the Fed from day-to-day politics.

U.S. District Judge Jia Cobb late Tuesday granted Cook’s request for a preliminary injunction blocking her firing while the dispute makes its way through the courts. Cobb ruled that Cook would likely prevail in the lawsuit she filed late last month to overturn her firing.

Trump, a Republican, said he was firing Cook on Aug. 25 over allegations raised by one of his appointees that she committed mortgage fraud related to two properties she purchased in Ann Arbor, Michigan, and Atlanta in 2021, before she joined the Fed. Cook is accused of saying the properties were “primary residences,” which could have resulted in lower down payments and mortgage rates than if either was designated a second home or investment property.

The White House insisted Trump had the right to fire Cook.

“President Trump lawfully removed Lisa Cook for cause due to credible allegations of mortgage fraud from her highly sensitive position overseeing financial institutions on the Federal Reserve Board of Governors,” White House spokesman Kush Desai said Wednesday in a statement. “This ruling will not be the last say on the matter, and the Trump Administration will continue to work to restore accountability and confidence in the Fed.”

But Cobb ruled that the allegations likely weren’t sufficient legal cause to fire Cook. Under the law governing the Fed, governors can only be removed “for cause,” which Cobb said was limited to actions taken during a governor’s time in office.

The “removal of a Federal Reserve Governor extends only to concerns about the Board member’s ability to effectively and faithfully execute their statutory duties, in light of events that have occurred while they are in office,” Cobb wrote. Cobb was appointed by President Joe Biden, a Democrat.

“President Trump has not stated a legally permissible cause for Cook’s removal,” the ruling added.

The decision means Cook will be able to participate in the Fed’s meeting Sept. 16-17, when it is expected to reduce its key short-term rate by a quarter-point to between 4% and 4.25%.

Federal Reserve governors aren’t like cabinet secretaries and the law doesn’t allow a president to fire them over policy disagreements or because he simply wants to replace them. Congress sought to insulate the Fed from political pressure, the court noted, by giving Fed governors long, staggered terms that make it unlikely a president can appoint a majority of the board in a single term.

“Allowing the President to unlawfully remove Governor Cook on unsubstantiated and vague allegations would endanger the stability of our financial system and undermine the rule of law,” Cook’s lawyer, Abbe Lowell, said in a written statement. “Governor Cook will continue to carry out her sworn duties as a Senate-confirmed Board Governor.”

The court also directed the Fed’s board of governors and its chair, Jerome Powell, “to allow Cook to continue to operate as a member of the Board for the pendency of this litigation.”

Lowell had argued in court filings that Cook was entitled to a hearing and a chance to respond to the charges before being fired but was not provided either. The court agreed that she was not provided due process by the Trump administration. Her lawsuit denied the charges but did not provide more details.

The case could become a turning point for the 112-year-old Federal Reserve. No president has sought to fire a Fed governor before. Economists prefer independent central banks because they can do unpopular things like lifting interest rates to combat inflation more easily than elected officials.

Many economists worry that if the Fed falls under the control of the White House, it will keep its key interest rate lower than justified by economic fundamentals to satisfy Trump’s demands for cheaper borrowing. That could accelerate inflation and could also push up longer-term interest rates, such as those on mortgages and car loans. Investors may demand a higher yield to own bonds to offset greater inflation in the future, lifting borrowing costs for the U.S. government, and the entire economy.

If Trump can replace Cook, he may be able to gain a 4-3 majority on the Fed’s governing board. Trump appointed two board members during his first term and has nominated a key White House economic adviser, Stephen Miran, to replace Adriana Kugler, another Fed governor who stepped down unexpectedly Aug. 1. The Senate Banking Committee is scheduled to vote Wednesday on Miran’s nomination.

Trump has said he will only appoint to the Fed people who will support lower rates.

Trump has repeatedly attacked Powell and the other members of the Fed’s interest-rate setting committee for not cutting the short-term interest rate they control more quickly. It currently stands at 4.3%, after Fed policymakers reduced it by a full percentage point late last year. Trump has said he thinks it should be as low as 1.3%, a level that no Fed official and few economists support.

Powell recently signaled that the central bank was leaning toward cutting its rate at its meeting next week.

Cook is the first Black woman to serve as a Fed governor. She was a Marshall Scholar and received degrees from Oxford University and Spelman College, and prior to joining the board she taught at Michigan State University and Harvard University’s Kennedy School of Government.

Source: AP

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Michelle

Commodity

Copper held steady above $9,900 a ton on the London Metal Exchange, with traders weighing supply risks in Indonesia and signs that deflationary pressures are easing in China’s industrial economy.

Prices for the bellwether industrial metal have traded in a narrow range this week, even after Freeport McMoRan Inc announced that it has suspended operations at its massive mine in Indonesia’s Grasberg minerals district after an incident left some workers trapped. Seven workers who could not evacuate are believed to be safe, and crews are clearing paths to them, it said.

The operation is the world’s second-largest copper mine, and a prolonged outage could quickly tighten the market, compounding longer-running supply constraints that have bolstered prices this year.

“Lost days do not necessarily have an immediate impact on global supply,” Bernard Dahdah, an analyst at Natixis, said in an emailed note. “That said, longer outages that run for weeks are much harder to compensate.”

On the demand side, data released Wednesday that showed China’s factory deflation eased for the first time in six months, in a tentative sign of progress in the government’s campaign to ease overcapacity in key industrial sectors.

China is in its third straight year of deflation for the first time since it started to transition away from central planning in the late 1970s. Nine straight quarters of economy-wide price declines reflect a mismatch between supply and demand, weighing on the balance sheets of companies and pushing down the earnings of both households and the government.

Copper prices were up 0.2% $9,929 a ton on the London Metal Exchange as of 11:08 a.m. local time. Aluminum, nickel and lead were also flat, while zinc and tin rose.

Source: Bloomberg Europe

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Glendon

Economic

Commodity

Asia's diesel markets remained thinly discussed on the trading window, though market structures went back to a softening trend and some spot offers did emerge from refiners.

More October refiner spot sales surfaced in line with earlier expectations, though some private negotiations could be ongoing.

The front-month diesel east-west price spreads narrowed slightly, reflecting the decline in ICE gasoil futures prices ahead of the contract expiry on Thursday.

Refining margins (GO10SGCKMc1) reversed gains and declined back to one-week lows of around $19.2 a barrel.

Cash differentials (GO10-SIN-DIF) slipped slightly to 86 cents per barrel, amid mixed buying and selling activities on the trading window.

Jet fuel markets continued to weaken further because of ample supply talks.

Regrade (JETREG10SGMc1) widened further to around $2 a barrel.

INVENTORIES

- U.S. crude, gasoline and distillate stocks rose last week, market sources said, citing American Petroleum Institute figures on Tuesday.

- Middle distillates inventories slipped slightly to 2.188 million barrels for the week ended September 8, according to industry information service S&P Global Commodity Insights.

REFINERY NEWS

- Petronas is trying to achieve a 90% operating rate by the end of this year at the crude unit for its Pengarang refinery, Ahmad Adly Alias, the firm's vice president for refining, marketing and trading told Reuters on the sidelines of the APPEC industry event on Wednesday.

NEWS

- Oil prices rose on Wednesday after Israel attacked Hamas leadership in Qatar and U.S. President Donald Trump asked Europe to impose tariffs on buyers of Russian oil buyers, though a weak market outlook capped further gains.

- An executive with Thai energy firm Bangchak Corp said on Wednesday there is no sign yet of details on the country's expected mandate for sustainable aviation fuel usage.

- Crude oil loadings from the Caspian Pipeline Consortium (CPC) marine terminal at Yuzhnaya Ozereyevka near Novorossiisk port were holding steady at around 1.6 million barrels per day so far in September, in line with a provisional export schedule, two traders familiar with the matter said on Tuesday.

- Southeast Asia is positioned to export biofuels to other markets such as Europe as production capacity exceeds demand in the region, a senior executive with Malaysian state oil and gas company Petronas said on Wednesday.

Source: Reuters

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Pepperstone

Economic

Forex

Political

As noted, Bank Rate is set to be maintained at 4.00% at the conclusion of the September MPC confab, after policymakers voted by the narrowest possible margin to deliver a 25bp cut at the prior meeting, in August. Money markets, per the GBP OIS curve, price no chance of any rate moves this time around, while discounting just 10bp of easing by year-end. The next 25bp cut isn't fully discounted until next March.

However, in keeping with almost all MPC decisions this cycle, the call to stand pat this time around is unlikely to be a unanimous vote.

A 7-2 vote in favour of holding Bank Rate steady seems to be the most plausible outcome, with external members Dhingra and Taylor dissenting in favour of a 25bp cut. Dhingra, owing to her typically uber-dovish policy stance, and Taylor owing to his initial vote for a 50bp reduction last time out, as well as recent commentary indicating his preference for ‘four to five' cuts being delivered this year (we've thus far had 3, in total).

In any case, no matter the vote split, the MPC's policy guidance is likely to be unchanged from that issued last time out, and the language with which participants have become familiar this cycle. Consequently, the statement is likely to reiterate that the MPC will take a ‘gradual and careful' approach in terms of future rate reductions, while also repeating that the pace of future rate reductions will remain ‘data-dependent'.

With the rate decision itself, and accompanying policy statement, both relatively predictable, the main area of intrigue around the September MPC decision will be the annual review into the Bank's balance sheet.For the last three years, the MPC has been reducing holdings in the Asset Purchase Facility (APF), which now comprises only Gilts, by £100bln per annum, with that pace split between the passive run-off of maturing securities which haven't been replaced in the portfolio, and active sales of Gilts from within the APF.

While those active sales have proceeded relatively smoothly, at least in terms of their reception by market participants, the Bank's own research points to the active sale process adding a premium of as much as 25bp onto the 10-year Gilt yield, and likely a higher premium further out the curve. In addition, these active sales also result in the Bank crystallising a loss on its holdings, for which it must be indemnified by HM Treasury, while also prompting a much steeper Gilt curve, compared to DM peers, as active sales take place in a market where demand for long Gilts is already waning significantly.With all that in mind, and with the tightening impact of quantitative tightening (QT), to at least some extent, offsetting any easing impulse from ongoing Bank Rate reductions, the MPC are likely to trim the overall QT envelope this time out.

Maturing Gilts in the APF would passively reduce the size of the Bank's holdings by around £50bln in the twelve months from the upcoming review, with the question then coming down to the amount of active sales that the MPC would seek to conduct. Anything greater than the 2024/25 amount of £13bln seems implausible, which likely leaves the overall reduction will land at around £60bln over the next 12 months. Ending active Gilt sales would be a pragmatic option to ensure market stability, though tilting sales increasingly towards shorter maturities to avoid a disorderly rise in long-end yields seems a more plausible choice.

Turning to other matters, with there being no new economic forecasts due this time around, there is also no post-meeting press conference scheduled. That said, Governor Bailey may make some media remarks, though these are likely to be very much in keeping with recent comments, namely that rates remain on a ‘downward path', but that the MPC should neither cut too quickly, nor too much.Taking a step back, besides the aforementioned balance sheet developments, the September MPC decision is unlikely to offer especially much by way of fresh information on the outlook for Bank Rate.

Still, by retaining the ‘gradual and careful' guidance, the MPC will clearly retain an easing bias, and a preference to deliver rate cuts at a predictable, quarterly pace. As such, the next 25bp cut is still likely to come at the November meeting, though the release of the September CPI report, due 22nd October, may threaten such a call, if headline inflation rises north of the MPC's projected 4% peak.

Source: Pepperstone

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Gerik

Economic

Commodity

Gold's Performance: A Shining Safe Haven

Gold has been one of the standout performers in 2025, with prices up more than 40%, far surpassing the S&P 500's 10% gain and Bitcoin's 20% rise. As a traditional store of value, gold's surge reflects broader economic uncertainties and the growing appeal of safer investments amidst financial turmoil. Unlike the stock market, which often benefits from overall optimism, gold's rally is rooted in concerns such as inflation, geopolitical instability, and financial risks.

The precious metal's rise is often seen as a barometer of investor sentiment during times of instability. People and institutions typically flock to gold when they seek to hedge against uncertainty, especially when other assets like the U.S. dollar or long-term bonds lose their appeal. Although gold’s current value reflects positive market conditions for some sectors, such as tech stocks, the surge is also a signal of broader economic concerns.

Lower Interest Rates and Gold's Appeal

The expectation of lower interest rates, as the Federal Reserve looks to support a weakening labor market, has further bolstered gold’s attractiveness. As interest rates decline, risk-free assets like U.S. bonds become less appealing, pushing investors toward gold. The potential for a substantial rate cut, even a jumbo cut, has electrified markets, making gold a more appealing safe-haven investment in comparison to low-yielding assets.

In addition to U.S. policy moves, global political shifts, particularly following the pandemic, have contributed to increased demand for gold. With rising uncertainty in long-standing global alliances and fresh tensions in the political landscape, investors are hedging against potential risks by turning to precious metals.

Dollar Decline and Global Gold Demand

The U.S. dollar has faced significant pressure in 2025, with the greenback losing nearly 10% of its value by mid-year. The U.S. government's mounting debt and the growing concerns over the dollar’s stability have led to increased interest in alternatives like gold. Central banks worldwide have responded by boosting their gold holdings, surpassing U.S. Treasury holdings for the first time since 1996, according to Bloomberg data.

This global trend reflects broader shifts in confidence away from U.S. assets. Analysts predict that continued pressure on the dollar could propel gold to new heights. Goldman Sachs analysts, for instance, forecast that gold could reach $5,000 an ounce by 2026, driven by the growing distrust of the U.S. financial system and potential challenges to the Federal Reserve’s independence.

Gold’s Long-Term Bullish Outlook

Despite gold’s strong performance, it remains a defensive asset, not driven by the promise of high returns or technological innovation. Unlike assets like Bitcoin, which offer the potential for rapid gains, gold’s value lies in its stability and reliability. This makes it a trusted asset during times of economic uncertainty but also means that its growth is often tied to the broader health of the global financial system.

As we move into 2026, the outlook for gold remains positive, particularly if inflation pressures persist and if the U.S. dollar continues to weaken. While gold may not offer the explosive growth seen in other sectors, its role as a safe-haven asset in volatile times ensures its place in the portfolios of many investors looking for stability.

Gold's 2025 rally reflects broader economic concerns, including inflation, geopolitical instability, and Fed policy. As global uncertainty persists, gold remains a valuable asset for risk-averse investors. With expectations of continued weakness in the U.S. dollar and potential Federal Reserve actions, the precious metal’s performance is likely to continue shining well into 2026.

Source: Yahoo Finance

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Michelle

Economic

Stocks

A gauge tracking emerging market equities rose on Wednesday, with a Federal Reserve interest rate cut all but sealed for this month, while Polish assets came under pressure as Russia's war in Ukraine spilled into its territory.

The zlotyweakened 0.4% against the euro, underperforming regional peers, while Warsaw's stocks fell 2%.

Poland said it had shot down Russian drones that entered its airspace during an attack on western Ukraine — the first time a NATO member has engaged militarily inthe conflict.

Since Russia's invasion of Ukraine in 2022, drones have periodically strayed into NATO territory, including Romania and Poland, but had not previously been intercepted.

Ukraine's international bonds edged lower, while the Russian roubleweakened to a more than five-month low.

"We're going to see more incidents like this partly because it's war. Poland has a very strong lobby and the economy speaks for itself and continues to do well and it's politically in a good place, So it's in a very strong position," said Jonathan Young, CEO of CEEMENA-focused investment firm Gryphon Holdings.

"You're obviously going to get this kind of short-term reaction to what happened overnight but I wouldn't be reading too much into it."

Meanwhile, an Israeli airstrike on Qatar that targeted Hamas leaders rocked markets in the Middle East. Stocks in Dohafell 0.4%, while Saudi Arabia'sand Dubai'sindexes slipped more than 0.2% each.

Tel Aviv stocks, however, bucked the trend, hitting a record high for a second straight session.

Emerging markets shook off a week of political churn in countries including Turkey, Argentina, Thailand, Indonesia and Nepal, as a looming Federal Reserve rate cut kept risk appetite alive. The MSCI EM equity gauge was on track for a second straight weekly gain, with CME's FedWatch tool showing a 25 bp cut fully priced and odds of 50 bp creeping higher.

"A lot of EM countries don't have deep stock markets, but they have big economies. If the Fed cuts and the dollar is weak, there will then spillover effects into these stock markets, but the longer-term view is what's the economy looking like," Young added.

Hungary's central bank was due to publish August minutes on Wednesday after holding rates steady for an 11th straight month, with headline inflation still above its 2%–4% target band. The high carry has kept the forint in favour, powering one of central and eastern Europe's strongest year-to-date gains.

In Asia, Chinese stocks,,were in the green, tracking broader Asian markets, after data showed the country's producer deflation eased in August as Beijing stepped up efforts to curb price competition, while consumer prices fell at their fastest rate in six months.

Source: Reuters

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Gerik

Economic

Stock Market's Focus Shifts to Jobs Data

Stock traders are shifting their attention away from inflation concerns as the U.S. job market takes center stage in shaping future Federal Reserve policies. Despite expectations for a hot inflation report when the Consumer Price Index (CPI) is released on Thursday, the market is bracing for a more measured response. Options traders are anticipating only modest movements in the S&P 500 Index, with a swing of nearly 0.7% in either direction, which is lower than the average reaction to past CPI reports.

Traders are more concerned with the U.S. labor market, where recent data has shown signs of weakness. This weakness is expected to push the Federal Reserve to lower interest rates, with the market pricing in a potential rate cut of 0.25% at the upcoming September meeting. As inflation continues to remain high, the Fed's challenge is finding a balance between combating inflation and supporting a struggling job market.

Inflation Expectations and the Fed's Rate Path

Economists are forecasting a 0.3% rise in core CPI for August, which would leave inflation significantly above the Fed's 2% target. A higher-than-expected inflation print could delay the Fed's planned rate cuts and prompt a shift in market sentiment. However, most traders are focused on the labor data, with weaker jobs numbers likely leading to more aggressive Fed action in the form of rate cuts in October and December.

The Fed's future actions are being closely watched, as expectations are building for at least a full percentage point in rate cuts over the next year. The market is betting that weaker job growth will give the Fed room to act, even if inflation remains sticky.

Market Reactions to CPI and Economic Growth

The potential market reactions to the CPI report vary depending on the data’s outcome. If the core CPI rises between 0.25% and 0.3%, the S&P 500 could see an advance of 1% to 1.5%. However, a CPI increase above 0.4% could lead to a decline of up to 2% in the S&P 500. While the economy remains resilient with GDP growth projected at 3% for the third quarter, any positive surprises in economic data could complicate the Fed's efforts to curb inflation and force the central bank to keep rates higher for longer.

Despite the ongoing uncertainty, the Cboe Volatility Index (VIX) remains well below the critical 20 mark, signaling that traders are not overly concerned in the short term. The Citigroup U.S. Economic Surprise Index is also near its highest level since January, indicating that economic data is largely exceeding expectations. However, if positive economic surprises continue, it may make the Fed's task of managing inflation more difficult, especially if inflation pressures persist.

For stock traders, the direction of the labor market will be the most critical factor in determining the Fed's next move. If job data remains weak and inflation continues to surprise on the upside, the Fed could be forced to keep rates higher for longer, which could add volatility to the markets. Conversely, if the Fed's actions align with market expectations and inflation pressures subside, the outlook for stocks could improve. As traders await the CPI report and the next jobs data release, the focus will remain on how the Fed balances its inflation-fighting mandate with the need to support economic growth.