August 27, 2025

To continue the Trump-Cook reporting from yesterday … Janet Yellen has weighed in:

Former Federal Reserve Chair and Treasury Secretary Janet Yellen slammed President Trump on Wednesday for moving to fire Fed board of governors member Lisa Cook, calling his actions “unlawful” and “dangerous.”

“US President Donald Trump’s claim that he has ‘fired’ Federal Reserve governor Lisa Cook ‘for cause’ is not only unlawful. It is profoundly dangerous,” she wrote in an opinion piece in the Financial Times.
…
Yellen defended Cook in her article, saying she has done her job “with integrity.”

She also said Trump’s attempt to fire her was motivated by “intimidation.”

“By targeting Cook, Trump is sending a chilling message to every member of the Federal Reserve board and to the regional reserve bank presidents who take part in the Federal Open Market Committee: express disagreement with the president’s views and you are next,” she wrote.

Yellen also said that Trump’s move against Cook undermines the independence of the Fed, presents long-term inflation risks and lowers the value of the dollar.

She cited instances of political capture of the monetary authority in different countries, including Germany, Hungary, Argentina and Turkey.

“The names change, but the story is the same,” she wrote.

As Assiduous Reader niagara points out in a comment, the US curve has steepened considerably since Trump took office, which is consistent with the market resisting a potential premature or overdone monetary easing.

PerpetualDiscounts now yield 5.69%, equivalent to 7.40% interest at the standard conversion factor of 1.3x. Long corporates continue to yield 5.03%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now 235bp, a slight (and perhaps spurious) narrowing from the 240bp reported August 20.