LIVE MARKETS-Bond market supported as Supreme Court deliberates Fed Cook case

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BOND MARKET SUPPORTED AS SUPREME COURT DELIBERATES FED COOK CASE

The Supreme Court appeared to be skeptical on Wednesday that U.S. President Donald Trump has the authority to fire Federal Reserve Governor Lisa Cook immediately for “cause,” helping to stabilize bonds and boost expectations of U.S. central bank independence.

During about two hours of arguments, the justices indicated they are unlikely to grant the Trump administration's request to lift a judge's order barring Trump from immediately firing Cook while her legal challenge continues to play out.

When the Supreme Court agreed in October to hear the case, it left Cook in her job for the time being.

“While the fate of the case remains uncertain, the court’s concern toward Trump’s attempt to fire Cook bodes well for the market’s confidence in the independence of the Fed, at least for the time being,” BMO Capital Markets rate strategists including Vail Hartman said in a report on Thursday.

“When combining the takeaways from the Trump v. Cook hearing with the unanimous reappointment of Reserve Bank presidents, the market has retained its confidence that the Fed’s independence will remain intact for the foreseeable future,” they said.

The analysts note, however, that uncertainty about the Fed’s policies remains with Trump also expected to soon announce a successor to replace Chair Jerome Powell, whose term ends in May.

(Karen Brettell)

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