The bond market has looked relatively placid in recent days, but Dr Komal Sri-Kumar warns against mistaking quiet for resolution. “This is not resolution, it is calm before the storm,” he writes in his weekly SriKonomics commentary.
Sri-Kumar is President of Sri-Kumar Global Strategies, an advisory firm that works with sovereign wealth funds and multinational investors on global risks. A frequent voice on business media, he has long argued that the independence of the US Federal Reserve is central to maintaining confidence in markets. His concern now is that political attacks and legal manoeuvres could erode that independence just as inflationary pressures are beginning to re-emerge.
President Trump’s feud with Federal Reserve Chairman Jerome Powell has returned to centre stage, this time wrapped in legal proceedings against Governor Lisa Cook. The administration has moved from demanding her removal to opening a criminal investigation into alleged mortgage fraud. Cook has denied wrongdoing and her lawyer has called the claims a political reach. “The fight is not really about mortgage documents,” Sri-Kumar writes, “it is about control of the Federal Reserve.”
The stakes are clear. Forcing Cook off the Board before the Federal Open Market Committee meeting on September 16 could tip the balance in favour of immediate rate cuts. Her legal team is working to keep her seat, setting up a clash between the courts and the administration.
Investors have so far responded as if the confrontation is political theatre rather than policy substance. Equities lifted and Treasury yields dipped after a weak jobs report in August raised hopes of easier policy. Gold, meanwhile, has risen sharply, reflecting deepening distrust. At $3,640 per ounce, up nearly 40% this year, it signals more anxiety than Treasury or equity markets currently reveal.
Sri-Kumar stresses that the calm may not last. If Cook is removed before September 16, or if inflation data surprise on the upside, yields could rise quickly and the dollar weaken further. A hawkish turn by Powell, determined to defend his legacy as Chair before his term ends in 2026, could have a similar effect.
The recent Federal Appeals Court ruling against parts of Trump’s tariff structure adds another layer of uncertainty. The administration is likely to appeal, but until the Supreme Court weighs in, investors face the prospect of rolling legal disputes over trade policy. That uncertainty feeds directly into expectations for inflation, deficits, and the trajectory of yields.
Investor distrust is now showing up most clearly in the price of gold, which has surged by nearly $1,000 since January. Sri-Kumar argues that markets are wrong to assume that nothing fundamental has changed. Powell remains Chair, Cook remains on the Board, and tariffs may be re-imposed, but the veneer of stability hides a deeper fragility. “At some point, the bond market will no longer be able to shrug off these potential developments.”
Support independent community journalism. Support The Indian Sun.
Follow The Indian Sun on X | Instagram | Facebook
Support Independent Community Journalism
Dear Reader,The Indian Sun exists for one reason: to tell stories that might otherwise go unheard.
We report on local councils, state politics, small businesses and cultural festivals. We focus on the Indian diaspora and the wider multicultural community with care, balance and accountability. We publish in print and online, send regular newsletters and produce video content. We also run media training programs to help community organisations share their own stories.
We operate independently.
Community journalism does not have the backing of large media corporations. Advertising revenue fluctuates. Platform algorithms change. Costs continue to rise. Yet the need for credible, grounded reporting in a multicultural Australia has never been greater.
When you support The Indian Sun, you support:
• Independent reporting on issues affecting migrant communities
• Coverage of local and state decisions that shape daily life
• A platform for small businesses and community groups
• Media training that builds skills within the community
• Journalism accountable to readers
We cannot cover everything, but we work to cover what matters.
If you value thoughtful reporting that reflects Australia’s diversity, we invite you to contribute. Every donation helps us maintain the quality and consistency of our work.
Please consider making a contribution today.
Thank you for your support.
The Indian Sun Team
