Trump’s renewed effort to remove Federal Reserve Governor Lisa Cook over pre-appointment mortgage allegations remains the dominant catalyst shaping trader sentiment. After the Supreme Court’s June 29, 2026, 5-4 ruling blocked an immediate firing and required due process, the White House restarted proceedings in early August, giving Cook until August 26 to respond. Cook continues serving, recently delivering remarks on August 5 highlighting persistent inflation above the 2% target and openness to rate hikes if needed. The market’s low implied probabilities of removal by late 2026 reflect the procedural barriers, ongoing litigation, and precedent protecting Fed independence under the “for cause” standard. Key near-term developments include the response deadline and any subsequent lower-court rulings.