President Donald Trump's renewed calls for Federal Reserve Chair Jerome Powell's resignation have prompted investors to protect portfolios against the risk of higher inflation, as a central bank more willing to lower interest rates could fuel price rises and make lenders demand higher compensation to hold bonds.

A potential ouster of Federal Reserve chair Jerome Powell by U.S. President Donald Trump could "collapse" both the currency and bond markets and would lead to a spike in inflation expectations, Deutsche Bank said on Friday.

Odds of Jerome Powell's removal hit new highs as Trump waves draft firing letter. Political pressure and inflation data drive markets into uncertainty.

On July 16, Rep. Anna Paulina Luna (R-FL) retweeted "confirmed" in a post by journalist Breanna Morello alleging that Federal Reserve Chair Jerome Powell would be fired. Morello's post claimed that Congresswoman Luna had earlier said, "Fed Chair Jerome Powell's firing is imminent."

President Donald Trump’s potential dismissal of Federal Reserve Chair Jerome Powell is a major and underpriced risk that could trigger a selloff in the US dollar and Treasuries, a Deutsche Bank AG strategist said.

A Fed chief warmer to cutting rates could have a mixed effect on equities but could weaken the U.S. dollar, increase volatility in the Treasurys market and raise longer-term rates.

Reports that President Trump was considering trying to remove Federal Reserve Chair Jerome Powell have had a clear, if modest, effect on the bond market—even after Trump told reporters that he [wasn’t “planning on doing anything.

Trump quietly floated the idea of firing Fed Chair Jerome Powell to a handful of Republican lawmakersand they told him they'd back it. News of the draft ouster letter sent Wall Street wobbling, with stocks slipping and the dollar dipping.

Gold, bitcoin, and Treasury yields all rose during the market uncertainty. The drop coincided with tariff worries and President Donald Trump slamming Federal Reserve Chairman Jerome Powell again.