New York — Investors are reacting to the Trump administration’s criminal inquiry involving Federal Reserve Chairman Jerome Powell by reviving a sentiment to sell off U.S. assets, including stocks, bonds, and the dollar.
On Monday morning, stock futures dipped significantly. The Dow futures were down by 350 points, marking a 0.7% decrease, while the S&P 500 futures fell by 0.6%. Additionally, futures tied to the Nasdaq fell 0.9%.
The U.S. dollar also showed weakness against major currencies. The dollar index, which measures its strength against six key currencies, dropped by 0.4%, leading to a notable rally in other currencies.
In the treasury market, U.S. Treasuries experienced a slight decline. The yield on the benchmark 10-year bond rose to nearly 4.2%, its highest in a month, signaling potential negative implications from the Trump administration’s stance toward the Fed, suggesting that interest rates may not decrease as the president has desired.
The Federal Reserve’s independence is widely regarded as fundamental to the stability of U.S. financial markets. Investors, economists, and historians all consider this independence essential for sound monetary policy, free from political pressures.
Last year, the Trump administration went so far as to openly criticize the Fed’s independence, blaming Powell for not lowering interest rates quickly enough to meet the president’s expectations.
Lower interest rates often result in decreased borrowing costs for consumers, including credit cards. But if the central bank were to lower rates too hastily, ignoring inflation, it could alarm investors who might then demand higher returns due to perceived risks in U.S. assets.
“This is clearly a risk-off,” noted Krishna Guha, Vice Chairman of Evercore ISI, in a Sunday report.
Monday’s trading indicates the onset of a “Sell America” trend, reminiscent of spring 2025 when concerns over Trump’s trade policies led to a mass exit from U.S. assets, causing a sharp drop in bonds and the dollar and pushing stocks toward bear market territory. However, they bounced back sharply later that year following a reduction of some of Trump’s more stringent tariff threats.
“Given that global investors are applying significant risk premiums to U.S. assets, we anticipate declines in the dollar, bonds, and stocks on Monday, similar to last April’s situation when Powell’s position was under fire,” Guha commented. “Safe-haven assets like gold are likely to rise.”
Indeed, gold saw a 2% increase, reaching an all-time high above $4,600 per troy ounce by Monday morning. Silver also surged, outperforming gold with a 6% rise.
The rising prices of gold and silver amidst ongoing threats to the Fed’s independence highlight what’s referred to in financial circles as “deteriorating trading.” Investors are flocking to these hard assets, which aren’t tied to governmental credibility, out of fear that bonds and currencies linked to the U.S. could lose value due to increasing pressure on central banks and rising debt issues.
Back in 2025, markets experienced a brief panic when President Trump publicly lambasted Powell for being “too slow” and questioned his capability to lead the central bank.
“While markets are wary about the Fed’s independence being threatened, they’ve become somewhat desensitized to hostile remarks and may not react without clear signs of trouble,” Guha explained. “The subpoena and Powell’s reply are likely to provide the necessary evidence that could change the narrative.”
