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Stocks, bonds, and the dollar dropped sharply on Monday.
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Recent comments from the White House have investors worried about Fed independence.
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Trump stepped up attacks on Monday, calling Powell a “loser” and demanding that rates be lowered.
The “sell America” trade was in full swing as investors kicked off the week on Monday.
Stocks and bonds tanked, while the US dollar set a fresh three-year low. The moves came after President Trump further escalated his feud with Fed Chair Jerome Powell, saying on saying on Truth Social that the central bank head is a “major loser” who has taken too long to cut interest rates.
These comments shouldn’t be confused with Trump saying on social media last week that Powell’s “termination cannot come fast enough,” again in reference to a lack of rate-cut activity. Both are new entries in the pair’s long-running feud.
“A lot of this could just be trying to set the storyline for later on, that if we do go into a recession, it was because the Fed didn’t cut rates,” Bespoke co-founder Paul Hickey told Business Insider, adding that it “sets the Fed up for being scapegoated down the line.”
Regardless of the motivation, the comments prompted traders to “sell America” in markets on Monday. Here are the three major assets impacted:
Stocks
Bonds
Currencies
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US dollar: Down more than 5% versus the euro and yen
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Dollar Index: Down 0.9%, paring losses of as much as 1.3%
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On Friday, Kevin Hassett, the director of the National Economic Council, said that Trump will “study” ways to remove the Fed chair. The president has long lambasted Powell for not lowering interest rates. Trump’s frustration has gained steam since Powell’s latest speech, in which he suggested that the president’s tariffs could create policy issues for the central bank.
“I think the Fed’s hands are tied, and he doesn’t like it,” Jamie Cox, Harris Financial Group financial advisor, told BI
White House interference in Fed leadership isn’t seen sitting well with investors, and attempts to politicize monetary policy decisions would likely introduce further uncertainty into markets.
“Not only is the independence of the Fed clearly under threat, but the prospect of de-dollarization and a move away from US hegemony is an increasingly realistic one,” said Michael Brown, a senior research strategist at Pepperstone.
