It could’ve been worse.

Indeed, I’ll argue it should’ve been worse.

“It” is the bond market reaction to the Trump administration’s pressure campaign against Lisa Cook. Headed into the long holiday weekend in the US, benchmark US yields were largely unchanged on the week. Not too bad considering the — how should I put this? — extremely exigent circumstances.

The US front-end and the dollar were similarly blasé. “The two-year USD swap rate has been repriced only 5bps lower since Cook was fired, and pressure on long-end Treasurys has eased, signaling a rather sanguine approach,” ING’s Francesco Pesole remarked. “While markets remain reluctant to speculate on this Fed story and continue to focus on data-driven short-term developments, risks have undoubtedly grown.”

Yes, they have indeed. Just ask Bill Dudley. He knows. And although you have to squint to see it, there’s at least some evidence of the “risks” Pesole alluded to in breakevens.

As the figure shows, 10-year BKEs were 2.46% or so mid-week. That was the widest since February.

To be sure, there’s nothing especially dramatic about that in and of itself. It’s worth a mention solely because it nodded, however vaguely, to the longer run macro read-across of a central bank beholden to a populist.

That aside, this week’s moves were very tame, and it’s no secret why: Nothing’s really changed regarding the near-term (note the emphasis) outlook for Fed policy. A cut at the September meeting was already guaranteed, and so was another cut following at least one of this year’s other two remaining meetings.

Market pricing on Friday reflected two cuts fully priced with one-in-three odds of a third, basically unchanged versus pre-Cooked (if you will) levels.

As the figure shows — and this speaks to the notion that traders still believe the data matters more than the political pressure — the July jobs report was a much bigger deal for Fed-cut pricing than any political fireworks.

My sense is that the odds of 75bps (or even 100bps) of easing over this year’s remaining policy gatherings are higher than markets are willing to price currently. “Proper risk management means the FOMC should be cutting the policy rate now,” Chris Waller said, while speaking on Thursday in Miami. “I anticipate additional cuts over the next three to six months,” he added.

That sounded, to me anyway, like an openness to whatever Scott Bessent — speaking on the Fed Board through Stephen Miran — is inclined to suggest for rates between now and year-end. But in the same remarks, Waller indicated he’d only support a 50bps move next month if the August jobs report comes in weak.

My “base case,” if you can call it that, is for 75bps of cuts over the balance of the year with the risks plainly skewed for more, particularly if the Supreme Court lets Trump’s firing of Cook stand while her case works its way through the lower courts (and then ultimately back to SCOTUS).

But the real fireworks for Fed funds will probably have to wait for next year. And that’s just what markets are pricing.

“The drama surrounding Trump’s attempt to fire Cook has reinforced expectations for a more dovish Fed in 2026,” BMO’s Ian Lyngen and Vail Hartman wrote Friday, noting that market pricing for next year is now 70bps more dovish than the median dot from the last SEP.