As President Donald Trump jawbones the Federal Reserve, the likelihood that he's going get what he wants this year from the central bank continues to grow.
Markets expect the Fed to hold off on rate hikes and are even anticipating the possibility of a cut during the next year or two, playing into the low-rate environment the president has espoused.
That in turn would decrease the chances that Trump might try to fire Fed Chairman Jerome Powell, a move universally regarded as difficult to achieve and likely disruptive if not disastrous for the market.
"Replacing Powell might prompt initial disruptions in markets. Reduced US central bank independence could lead to longer-term damage to the US economy," Dana Peterson, North American economist for Citigroup, said in a note that called the threat of Powell getting ousted "deep within the realm of tail risks."
That chance may have declined even more in recent days as market conditions improved and Powell in a public forum Friday provided assurance that the Fed will be "patient" in how it normalizes monetary policy, attentive to what the market is signaling, and flexible in how it proceeds with interest rates and its balance sheet reduction.
Trump nonetheless made it clear he's still keeping an eye on things.
"Can you imagine if I had long term ZERO interest rates to play with like the past administration, rather than the rapidly raised normalized rates we have today," the president said in his latest Fed-related tweet Tuesday.
Conditions indeed have changed.
Whereas the market — and Trump's predecessor, Barack Obama — enjoyed for seven years the fruits of near-zero interest rates and quantitative easing that helped push the market up more than 300 percent, the current climate is one of rising rates and no Fed money-printing.