In a move that caught the Beltway by surprise, Tulsi Gabbard has resigned as Director of National Intelligence. The former Democratic congresswoman turned Trump appointee lasted barely a year in the role. For markets, this is yet another signal of instability in the US intelligence apparatus, a sector that historically trades on predictability.
The yellow flag is up for gilt yields, as investors factor in a premium for policy uncertainty. Gabbard's departure, while not directly impacting monetary policy, feeds into the narrative of a dysfunctional Washington that can't keep its fiscal house in order. Expect capital to seek safer harbours, perhaps towards British gilts if the Chancellor can keep his nerve.
But as always, the bottom line is that political drama costs money, and someone always pays the bill.
