Deutsche Bank Alert: Powell Ouster Could Thrust 30-Year Treasury Yields by 56 BPS

TradingKey - Deutsche Bank’s latest research report warns that if President Donald Trump removes Federal Reserve Chair Jerome Powell, challenges to the Fed’s independence could trigger severe turbulence in the U.S. Treasury market.

In recent weeks, Trump and his administration allies have intensified pressure on the Fed to cut rates faster than currently anticipated.

The report stated, "Replacing Powell aims to push for looser monetary policy, which would elevate inflation expectations and risk premiums."

After rumors emerged on July 16 that Trump might fire Powell, the 30-year Treasury yield surged 11 basis points within one hour.

Based on this, Deutsche Bank strategists further noted that, given last week’s short-term yield curve volatility, the 30-year nominal U.S. Treasury yield could spike by approximately 56 basis points — even as the short end of the yield curve rises due to expectations of near-term monetary easing.

Currently, the spread between the 5-year and 30-year Treasury yields has widened to 100 basis points, the highest since 2021, reflecting heightened market concerns over long-term risk premiums.

As of now, the 2-year Treasury yield stands at 3.859%, the 5-year at 3.910%, and the 30-year at 4.936%.

(Source: Investing)