$BNB

Public criticism of President Donald Trump of Federal Reserve Chairman Jerome Powell.

Yardeni warned that any interference with the Federal Reserve could threaten the global status of the US dollar.

"The ‘uniqueness’ of the United States will face a severe test due to interference with the Federal Reserve," they wrote, pointing to concerns that inflation may rise and that global central banks may begin to diversify away from US assets.

With Japan and China holding over $1.8 trillion in US Treasury bonds combined, Yardeni warned that these countries would be "on the front lines" if Trump were to dismiss Powell.

The company said that the confrontation over the Federal Reserve could spark a rise in US bond yields and harm the dollar.

"The concern for Asia is that the squabble over the strongest central bank... could send US yields skyward and the dollar into a sharp decline," said Yardeni.

In the worst-case scenario, the company said that Trump might attempt to completely dismiss Powell or appoint a 'shadow' chairman of the Federal Reserve to pressure him to resign.