The recent events involving the Federal Reserve have been quite significant. Powell received a subpoena from the Department of Justice regarding renovation projects, which has caused quite a stir. However, the real highlight is the hearing on January 21st — the Supreme Court hearing.

What is the court going to review? The case where the Trump administration attempted to dismiss Federal Reserve Board member Lisa Cook. It sounds very political, but the core issue is: can the White House bypass the protections of the Federal Reserve Act to arbitrarily remove Fed officials? The weight of this ruling is not to be underestimated.

American bank economist Aditya Bhave bluntly stated: if Cook loses the case, the probability of Powell being dismissed due to the Department of Justice investigation will significantly increase. He emphasized in his report that this case has a more critical impact on policy direction than the next Fed chair appointment. In other words, it’s a litmus test for whether the president can reshape the Fed’s power structure.

Why is the market so tense? The key is here — once the Fed’s independence is compromised, the logic of monetary policy making could shift from "data-driven" to "political face considerations." This poses a fundamental threat to long-term capital costs and asset pricing.

From a trading perspective, CME Group data already says it all. Traders are now heavily betting that the Fed will not move this month, pushing the next rate cut further into June. The market’s anxiety and its pricing of uncertainty are all reflected in these numbers.