investingLive Americas FX news wrap 26 Aug: Trump fires Fed’s Cook and looks for control. | investingLive

The U.S. day began with the release of July durable goods orders, which fell -2.8%, a smaller decline than the -4.0% expected, with transportation once again the main drag. Stripping out transportation, orders rose +1.1% versus the 0.2% forecast, with the prior month revised up to 0.3%. Looking through another lens, excluding defense, orders dropped -2.5%, still better than the -3.6% expected, though the prior month’s decline was revised deeper to -9.5%.

The standout detail came from nondefense capital goods ex-aircraft, a closely watched proxy for business investment, which climbed +1.1% against expectations of only +0.2%, with June revised higher to -0.6%. This gauge, which filters out large, volatile aircraft orders and defense-driven spending, provides a clearer read on private-sector investment sentiment. The gain suggests some resilience in business confidence despite recent volatility, with the series alternating between gains and losses over the past four months.

Overall, while headline durable goods remain soft—declining in three of the last four months—the underlying picture for core business investment is firmer, pointing to a steadier footing beneath the headline weakness.

Later, U.S. consumer confidence in August came in at 97.4, slightly above the 96.2 estimate and essentially flat compared to July’s upwardly revised 98.7. The current situation showed mixed signals: 22.0% of respondents said business conditions were “good” (up from 20.5%), while 14.2% viewed them as “bad” (up from 13.6%). In the labor market, 29.7% said jobs were “plentiful” (down from 29.9%), while 20.0% said jobs were “hard to get” (up from 18.9%). Looking ahead, expectations were subdued: 19.5% expected business conditions to improve, while 21.9% expected them to worsen. On jobs, 17.9% anticipated more positions ahead (slightly lower), while 26.8% expected fewer jobs (up from July). Income expectations were also softer, with 18.3% expecting gains (down from 18.7%) and 12.6% seeing declines (up from 11.8%). Overall, the data point to a modest improvement in headline confidence but a cautious outlook on jobs and incomes, suggesting consumers remain wary despite stable headline sentiment.

Fed’s Barkin said he expects only a modest interest rate cut, framing his outlook around expectations for little change in economic activity through year-end. His restrained tone highlights the Fed’s ongoing challenge of projecting policy amid heightened uncertainty and shifting market dynamics.

In the bond market, the U.S. yield curve steepened. The 2-year yield fell -4.5 bps, while the 10-year declined a smaller -1.6 bps, and the 30-year rose +2.2 bps. That left the 2s–30s spread at 122 bps, the widest since January 2022, underscoring market concerns that the Fed could cut rates even as longer-term inflation risks remain. Fed funds futures continue to price in about an 84% probability of a 25-bp cut at the next meeting.

On the Fed, Trump said that he is ready for a legal fight with regard to the firing of Lisa Cook, but did say, that he would abide by any court decision. He mentioned that he had a candidate in mind, and late in the day, the Wall Street Journal citing sources said that Trump is considering quickly announcing a nominee to replace Gov. Cook. That nominee would be former World Bank Pres. Malpass. He also talked about extending Miran’s term (even now he has not been confirmed as a governor just yet).

Of more significance as Trump looks to make the Federal Reserve “His House”, Bloomberg citing sources said the Trump administration is reviewing options for exerting more influence over the Federal Reserve’s 12 regional banks that would potentially extend its reach beyond personneal appointments in Washington. In other words, Trump wants the power to appoint the regional presidents as well and not just the Governors. If the Fed has to independent, fill the seats with Trump appointed members.

US stocks closed higher with the :