Markets sold off worldwide after President Trump announced plans to fire Fed governor Lisa Cook and threatened steep tariffs on China, raising fears about Fed independence and the dollar’s role as a reserve currency. S&P futures were down this morning. But some hopes emerged as investors focused on the Fed’s institutional strength.There was a global selloff in the markets today and every major index—U.S. futures, Asia and Europe—were down this morning. Two major factors are driving the negativity: President Trump’s announcement last night that he will fire U.S. Federal Reserve governor Lisa Cook, thus calling into question the economic independence of the world’s most important central bank; and Trump remarking that he may impose 200% tariffs on China if Beijing restricts the U.S.’s access to supplies of rare earth minerals that are 90% controlled by China.The result: Investors got a look at a world where the dollar is no longer a reliable reserve currency and decided that they did not like it.S&P 500 futures were sharply down this morning but made a recovery before the opening bell in New York. That recovery appears to be based on hopes that even if Trump gets his way in replacing Cook, that the Fed as an institution is strong enough that it won’t simply bend to Trump’s will with large, sudden cuts to the base interest rate. The selloff extended to the bond market. “Investors will naturally start to increasingly question the independence of the Fed, which would result in a steeper yield curve and a weaker dollar,” ING’s Chris Turner told clients this morning. “The US 2-30 year yield curve broke to a new cyclical high overnight at 122bp and is back to levels seen before the Russian invasion of Ukraine in 2022. The question will be whether this pressure on the Fed triggers an outright sell-off in the long-end of the bond market. On that subject, this week sees the US Treasury auction $144bn of two, five and seven-year Treasury notes, where presumably Thursday’s seven-year issue will be the most challenging.” The chaos began yesterday when the S&P 500 closed down 0.43%. “Overnight in Asia, equity markets are reflecting Monday’s losses from Wall Street as well as President Trump’s intensified rhetoric on tariffs yesterday evening. Trump’s comments included a threat of ‘200% tariffs or something’ on China if it does not export rare-earth magnets. He also warned of fresh tariffs and export restrictions on countries that do not remove digital taxes and associated regulations that hit American technology companies. Both the Nikkei (-0.88%) and the KOSPI (-0.94%) are seeing notable declines,” Jim Reid and his team at Deutsche Bank said in a note this morning. But as the markets approached the open in New York, the selloffs began moderating. S&P 500 futures were nearly flat before the bell. That appeared to reflect hopes that the Fed can withstand Trump’s interference.There is a “growing likelihood of Governor Christopher Waller becoming the next Fed Chair,” according to Convera’s George Vessey. “Waller’s pragmatic approach and strong credibility have reassured markets, especially amid rising concerns over Fed independence. Backed by President Trump’s team and favoured by betting markets, Waller is viewed as a stabilizing figure who could enhance the effectiveness of future rate cuts in supporting the labour market.”UBS’s Paul Donovan said much the same thing. UBS: “Trump already appointed a majority of Fed governors, without changing policy independence,” he said. The courts, the Senate and the Fed’s own committees all contain checks and balances against rogue central bankers. “Faith in these checks may limit the negative market reaction,” he told clients.Here’s a snapshot of the markets prior to the opening bell in New York:S&P 500 futures were down this morning but recovered flat, premarket, after the index closed down 0.43% yesterday. STOXX Europe 600 was down 0.62% in early trading. The U.K.’s FTSE 100 was down 0.55% in early trading.Japan’s Nikkei 225 was down 0.97%.China’s CSI 300 was down 0.37%. The South Korea KOSPI was down 0.95%. India’s Nifty 50 was down 1% before the end of the session.Bitcoin fell to $110.2K.This story was originally featured on Fortune.com