(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Jamie McGeever

ORLANDO, Florida, Aug 4 (Reuters) - U.S. President

Donald Trump's decision to fire a top labor official following

weak jobs data obviously sends ominous signals about political

interference in independent institutions, but it is also a major

strategic own goal.

Trump has spent six months attacking the Federal Reserve,

and Chair Jerome Powell in particular, for not cutting interest

rates. The barbs culminated in Trump branding Powell a "stubborn

MORON" in a social media post on Friday before the July jobs

report was released.

The numbers, especially the net downward revision of 258,000

for May and June payrolls growth, were much weaker than

expected. In fact, this was "the largest two-month revision

since 1968 outside of NBER-defined recessions (assuming the

economy is not in recession now)," according to Goldman Sachs.

This release sparked a dramatic reaction in financial

markets. Fed rate cut expectations soared, the two-year Treasury

yield had its steepest fall in a year, and the dollar tumbled.

A quarter-point rate cut next month and another by December

were suddenly nailed-on certainties, according to rate futures

market pricing. This was a huge U-turn from only 48 hours before

when Powell's hawkish steer in his post-FOMC meeting press

conference raised the prospect of no easing at all this year.

Trump's constant lambasting of "Too Late" Powell suddenly

appeared to have a bit more substance behind it. The Fed chair's

rate cut caution centers on the labor market, which now appears

nowhere near as "solid" as he thought.

Trump could have responded by saying: "I was right, and

Powell was wrong."

Instead, on Friday afternoon he said he was firing the head

of the Bureau of Labor Statistics, Commissioner Erika

McEntarfer, for faking the jobs numbers. Trump provided no

evidence of data manipulation.

So rather than point out that markets were finally coming

around to his way of thinking on the need for lower interest

rates, Trump has united economists, analysts and investors in

condemnation of what they say is brazen political interference

typically associated with underdeveloped and unstable nations

rather than the self-proclaimed 'leader of the free world'.

"A dark day in, and for, the U.S.," economist Phil Suttle

wrote on Friday. "This is the sort of thing only the worst

populists do in the worst emerging economies and, to use the

style of President Trump, IT NEVER ENDS WELL."

UNCERTAINTY PREMIUM

It's important to note that major - even historic -

revisions to jobs growth figures are not necessarily indicative

of underlying data collection flaws. As Ernie Tedeschi, director

of economics at the Budget Lab at Yale, argued on X over the

weekend: "BLS's first-release estimates of nonfarm payroll

employment have gotten more, not less, accurate over time."

It should also be noted that the BLS compiles inflation as

well as employment data, so, moving forward, significant doubt

could surround the credibility of the two most important

economic indicators for the U.S. - and perhaps the world.

Part of what constitutes "U.S. exceptionalism" is the

assumption that the experts leading the country's independent

institutions are exactly that, independent, meaning their

actions and output can be trusted, whatever the results.

Baseless accusations from the U.S. president that the BLS,

the Fed and other agencies are making politically motivated

decisions to undermine his administration only undermine trust

in the U.S. itself.

"If doubts are sustained, it will lead investors to demand

more of a risk premium to own U.S. assets," says Rebecca

Patterson, Senior Fellow at the Council on Foreign Relations.

"While only one of many forces driving asset valuations, it will

limit returns across markets."

This furor comes as Fed Governor Adriana Kugler's

resignation on Friday gives Trump the chance to put a third

nominee on the seven-person Fed board, maybe a potential future

chair to fill that slot as a holding place until Powell's term

expires in May. Whoever that person is will likely be more of a

policy dove than a hawk.

Policy uncertainty, which had been gradually subsiding since

the April 2 'Liberation Day' tariff turmoil, is now very much

back on investors' radar.

(The opinions expressed here are those of the author, a

columnist for Reuters)

(Editing by Mark Potter)