Wells Fargo

While markets digest the DOJ's probe into Jerome Powell, strategists at Wells Fargo are urging investors to look ahead to January 21, a date that could prove even more consequential for the US bond market and the Dollar.

The US Supreme Court is scheduled to deliberate on President Trump‘s attempt to fire Federal Reserve Governor Lisa Cook over allegations of mortgage fraud—charges she denies. Wells Fargo’s strategy team, led by Michael Schumacher, argues that a ruling permitting her removal would be the “last straw” for a market already anxious about the central bank's autonomy.

The 'Break the Camels Back' Scenario

In a note to clients, Wells Fargo outlined that if the judiciary signals the Executive Branch has the authority to dismiss Fed governors at will, the market reaction would “far exceed” the volatility seen in the last 24 hours. They view the case not just as a personnel issue, but as a litmus test for the future of monetary policy independence.

Projected Market Impact

The bank provided specific targets should the Supreme Court rule against Cook:

Strategic Implications

The report suggests that the market is currently in a “wait-and-see” mode but is primed for a repricing. If the administration succeeds in altering the composition of the Board of Governors via legal channels, traders may begin pricing in an additional 10–20 basis points of monetary easing by the second half of 2026, assuming a more dovish, politically compliant central bank.