Until January, this would have been regarded as madness. This year, it’s the new normal. 

“I think it is no more subtle than [Powell] wakes up every day and probably goes to bed every night thinking, ‘What can I do to preserve the institution?’” Richard Clarida, who previously worked under Powell at the Fed, told the Wall Street Journal.

Wall Street analysts are signaling that all this drama contains serious risks for the bond market, the dollar, and U.S. assets generally. If Trump gets his way, and U.S. monetary policy ends up being run by people who will do what he wants—as opposed to maintaining full employment and low inflation—then expect investors to recoil.

“In the broader context, investors may worry about whether the Fed still has the appearance of being independent. In a fiat currency system, trust is key, and even the appearance of undermining independent policy or data is dangerous—in this case, also threatening the U.S. dollar’s reserve role,” UBS’s Paul Donovan told clients this morning.

Already the bond market has started to twitch. “The news was a reminder of the lingering concerns over future Fed independence and risks of fiscal dominance, though the extent of the market reaction was fairly modest. The most sustained reaction was in gold (+0.98%),” Jim Reid and his team at Deutsche Bank told clients. “The dollar index fell by a couple of tenths following the news but was back to little changed (-0.05%) by the close. Front-end yields fell by 3–4 bps, but that move came amid a broader risk-off mood early in the session and also reversed later on.”

That doesn’t sound too serious—but it is a reminder that the bond market will move prices very quickly if it does not like what it sees.

“Renewed political pressure on the Federal Reserve is unsettling markets and risks weighing on the U.S. dollar,” Convera’s George Vessey told Fortune. “The potential exit of Cook would amplify dovish voices within the FOMC and deepen internal divisions, increasing uncertainty around the Fed’s policy path.”

The dollar has been signaling all year that investors are more shy of U.S. assets than they used to be. It is down 9.45% year to date on the DXY index of foreign currencies. To put that in perspective, in late 2022, at its peak, the dollar and the British pound approached—but didn’t reach—parity. A dollar was worth 92 pence. Today, the dollar buys only 74 pence. 

Stock investors didn’t like it, either. The S&P 500 declined for a third straight day yesterday, losing 0.24%.

Trump’s campaign against the Fed may backfire on him, Deutsche Bank said. “If concerns over threats to Fed independence increase, Powell could choose to serve out the rest of his board term (which ends in 2028) even after his term as chair ends next May,” its team said.

So what is Powell going to say tomorrow?

“Inflation remains on the front burner for Fed officials as tariffs still pose a risk to the economy and a pickup in inflation. The effective tariff rate on imports has risen to about 16% in August from 11% last month with the majority set to land on consumers. The labor market remains a wild card,” according to Eric Teal of Comerica Wealth Management. 

Despite inflation and the weak job market, Powell is likely to signal that a September rate cut is still in the cards, according to Goldman Sachs. “We do not expect him to decisively signal a September cut, but the speech should make it clear to markets that he is likely to support one,” David Mericle et al. told clients.

Here’s a snapshot of the markets prior to the opening bell in New York:

• S&P 500 futures were down 0.26 this morning, premarket, after the index closed down 0.24% yesterday. 
• STOXX Europe 600 was down 0.33% in early trading. 
• The U.K.’s FTSE 100 was down 0.27% in early trading.
• Japan’s Nikkei 225 was down 0.65%.
• China’s CSI 300 was up 0.39%. 
• The South Korea KOSPI was up 0.37%. 
• India’s Nifty 50 was up 0.13% before the end of the session.
• Bitcoin fell to $113.8K.