Congress Seen as Check on Trump Policies, But Markets Face Rising Volatility, Says BCA Research

Congress is expected to restrain President Donald Trump’s most aggressive policy initiatives, but financial markets should prepare for heightened volatility as he tests those boundaries, according to a recent analysis from BCA Research. The firm warned that while legislative and institutional checks remain strong, repeated efforts by Trump to bypass them could unsettle investors and increase uncertainty across asset classes.

In a research note, BCA Research stated that Congress will likely prevent the president from acting on what it described as his “worst impulses.” However, the analysts emphasized that Trump’s attempts to challenge those limits are themselves a key source of potential market volatility, particularly as political tensions intensify ahead of critical fiscal and electoral deadlines.

The firm highlighted the latest confrontation between the White House and the Federal Reserve as a major risk factor. Federal Reserve Chair Jerome Powell recently confirmed that he received a Department of Justice subpoena related to an investigation into renovations at the Fed’s headquarters. BCA Research characterized this development as another chapter in Trump’s long-running effort to exert influence over the central bank and reshape it according to his preferences.

The note also referenced last year’s dismissal of Federal Reserve Governor Lisa Cook over alleged mortgage fraud, a case that is now before the Supreme Court. According to BCA Research, these actions underscore a broader strategy aimed at pressuring the Fed’s leadership. Despite this, the firm stressed that Powell has not been formally charged, and it noted the Justice Department’s historically weak success rate in securing grand jury indictments in Washington, DC, and Virginia. Even in the event of an indictment, BCA Research считает it highly unlikely that a verdict would be reached before Powell’s term expires in May.

Looking ahead, the firm believes the Senate is well positioned to block any attempt by Trump to appoint an unconventional Federal Reserve chair. Retiring and moderate Republicans, some of whom have already opposed the president on key votes, are seen as a critical barrier. Senator Thom Tillis, for example, has publicly pledged not to advance Trump’s Fed nominees.

With government funding set to expire in January and divisions persisting among House Republicans, BCA Research expects Congress to increasingly constrain Trump’s domestic and foreign policy agenda as lawmakers turn their focus toward the November midterm elections.