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If Trump fires the Fed’s Powell ‘both the currency and the bond market can collapse,’ according to Deutsche Bank (fortune.com)

submitted 3 days ago by [email protected] to c/[email protected]

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If Trump gets his way and removes Jerome Powell as chairman of the U.S. Federal Reserve, the market reaction would be swift and brutal, Deutsche Bank’s George Saravelos argues.

It could collapse the currency and bond markets, he says in a note seen by Fortune. Polymarket puts the chances of a Powell ouster at 19%.

“We consider the removal of Chair Powell as one of the largest underpriced event risks,” Saravelos says.

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[–] [email protected] 2 points 3 days ago

How can it collapse the currency market? If one currency goes down in value the other goes up. Currency traders earn money either way they thrive on volatility.

He probably means the USD is going to drop and that will have severe consequences for the world economy. Since the US is a net importer. And most debt in the world is held in USD.