Investors sent a warning Wednesday that central-bank independence matters to Wall Street.

Reports that President Trump was again pondering firing Federal Reserve Chairman Jerome Powell drove longer-term Treasury yields higher and the dollar lower.

The president has denied that he is considering firing Powell, but his administration has ramped up its criticism of the central bank’s $2.5 billion office renovation.

The markets see the prospect of higher inflation if a new Fed regime were to cut rates in line with Trump’s wishes.

President Trump denied that he was planning an attempt to fire Federal Reserve Chair Jerome Powell after polling Republican lawmakers during a closed-door meeting about whether he should oust him.

“We’re not planning on doing anything,” Trump told reporters at the White House, adding later, “I don’t rule out anything, but I think it’s highly unlikely. Unless he has to leave for fraud.

• In Dress Rehearsal for Trump’s Firing a Fed Chairman, U.S. Markets Sank—Then Steadied
• VIX Pares Gains After Trump Says He Isn’t Planning to Fire Powell

Months later, that obscure budget critique has become the centerpiece of President Trump’s pressure campaign against Fed Chair Jerome Powell—and his potential attempt to remove him from office.

Past examples of tension between heads of government and their central bankers offer clues about how the Trump-Powell showdown could play out. Politicians usually want lower rates, mindful of consumer and business borrowing costs. Central bankers need to promote stable prices.

• Bank CEOs Are Coming Out Fighting for Fed Independence

Factory-gate prices held steady in June, surprising economists. The producer-price index was flat last month, the Labor Department said, missing forecasts for a 0.2% rise. The index rose by a revised 0.3% in May, more than previously thought. Economists watch the PPI closely because some of its data are used to calculate the Federal Reserve's preferred inflation metric, the personal-consumption expenditures price index.

• Fed’s Favored Inflation Gauge Likely Stalled in June

In an unusually direct critique of current policy during a planned question and answer session at the Brookings Institution, Barr said proposed changes to stress testing could make it easier for banks to game the system and reduce the effectiveness of one of the Fed’s most important oversight tools. Stress tests were first introduced after the 2008-09 financial crisis to gauge whether large banks could withstand severe economic shocks. (MarketWatch)

Much is made about how central bankers fret over rising inflation, but there’s really nothing like a sudden and sharp rise in unemployment to focus their minds and force them into action.

That’s the situation now facing the Reserve Bank of Australia, which could find itself guilty of committing a policy error if it passes up the opportunity to cut interest rates at its board meeting in mid-August. Read more.

8:30 a.m.: Import & Export Price Indexes
8:30 a.m.: Advance Monthly Sales for Retail & Food Services
8:30 a.m.: Philadelphia Fed Business Outlook Survey
8:30 a.m.: Unemployment Insurance Weekly Claims Report - Initial Claims
10 a.m.: Manufacturing & Trade: Inventories & Sales
10 a.m.: NAHB Housing Market Index
12:45 p.m.: FRB San Francisco President Mary Daly participates in moderated discussion at the Rocky Mountain Economic Summit
2 p.m.: U.S. Securities and Exchange Commission Closed Meeting
4 p.m.: Treasury International Capital Data
4:30 p.m.: Federal Discount Window Borrowings
4:30 p.m.: Foreign Central Bank Holdings
5:15 p.m.: Money Marketeers dinner event with Federal Reserve Governor Christopher Waller

8:30 a.m.: New Residential Construction - Housing Starts and Building Permits
10 a.m.: University of Michigan Survey of Consumers - preliminary
10 a.m.: State Employment and Unemployment

The Bank of England is likely to shift towards more short-dated and medium-dated gilt sales under its quantitative tightening program, Oxford Economics' Michael Saunders says in a note. Quantitative tightening is the process of offloading bonds purchased during previous periods of quantitative easing. The BOE is likely to announce that active gilt sales for the next year will focus on short-dated bonds—with maturities of three to seven years—and medium-dated bonds—of seven to 20 years—Saunders says. Market stress has been lower for these than for longer-dated bonds, he says. The BOE is expected to announce its quantitative tightening target for the 12 months starting in October at its September policy meeting. — Miriam Mukuru

• Prices charged for eggs plummeted in June as the market continues to recover from a bird-flu outbreak that constrained supply. Egg prices fell by 20% last month, according to data from the Labor Department's producer-price index report. (Dow Jones Newswires)
• The U.K.’s jobs market continued to cool in May, raising the pressure on the Bank of England to cut its key interest rate next month, despite last month’s unexpected pickup in inflation.
• Switzerland’s exports fell in the second quarter as tariff frontrunning reversed and a strong franc likely squeezed demand. Exports decreased 5.3% to 70.1 billion Swiss francs ($87.53 billion) over the quarter, from 74.0 billion francs in the first quarter, official data showed.
• China’s government is threatening to block a deal that would transfer ownership of dozens of seaports to Western investors if Cosco, China’s largest shipping company, doesn’t get a stake.
• Japan’s exports fell for a second straight month in June, fueling fears that U.S. tariffs will halt the nation’s economic recovery and complicate the central bank’s policy plans.
• Japanese Prime Minister Shigeru Ishiba is facing a critical electoral test on Sunday that could further complicate the country’s political landscape and economic recovery.

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by news associate Roshan Fernandez in New York. Send your tips, suggestions and feedback to roshan.fernandez@wsj.com.