New York —
Investors took one look at the Trump administration’s criminal investigation of Fed Chair Jerome Powell, and they decided to resuscitate the “Sell America” trade, selling off US stocks, bonds and the dollar.
Stock futures traded lower Monday morning. Dow futures were down 350 points, or 0.7%. S&P 500 futures fell 0.6%. Futures tied to the Nasdaq were 0.9% lower.
The US dollar weakened against other major currencies. The dollar index, which tracks the dollar’s strength against six major currencies, was down 0.4% – a sharp move for the greenback.
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Treasuries fell somewhat, too. The benchmark 10-year yield, which trades in opposite direction to prices, rose to just under 4.2%, near a one-month high. Bond yields’ move higher suggests the Trump administration’s action against the Fed could backfire, and rates may not start sinking as the president has demanded.
Federal Reserve independence is considered a cornerstone of what makes US financial markets exceptional. Investors, economists and historians all regard an independent central bank as key to stable financial markets, as policymakers can set monetary policy without regard to political interests.
The Trump administration embarked on an extraordinary affront to the Fed’s independence last year, lambasting Powell for not lowering interest rates as fast as the president would like.
Lower rates can lead to lower credit card rates and borrowing costs for consumers. But a central bank that lowers rates too quickly without regard to inflation can spook investors, who begin to worry that inflation could run rampant and thus demand a higher return for the risk of investing in American assets.
“This is unambiguously risk off,” Krishna Guha, vice chairman at Evercore ISI, said in a Sunday note.
Monday’s trades is a more muted echo of the “sell America” trade from the spring of 2025, when fear of Trump’s trade policy sent investors pouring out of American assets. That sent bonds and the dollar tumbling and stocks an inch away from a bear market in April before recovering sharply through the end of 2025 after Trump backed off some of his harshest tariff threats.
“We expect the dollar, bonds and stocks to all fall in Monday trading in a sell-America trade similar to that in April last year at the peak of the tariff shock and earlier threat to Powell’s position as Fed chair, with global investors applying a higher risk premium to US assets,” Guha said. “Gold and other safe havens should rally.”
Gold, a safe haven amid uncertainty, gained 2%, hitting record highs above $4,600 a troy ounce Monday morning. Silver, also considered a haven, rose as well, outpacing the gains in gold, surging 6%.
The surge in precious metals like gold and silver amid renewed threats to the Fed’s independence is emblematic of what Wall Street has dubbed the “debasement trade”: Investors pile into gold and silver – which are hard assets, not beholden to the reputation of a government or institution – because of worries that currencies and bonds tied to a nation (in this case the United States) will increasingly lose value amid pressure on central banks, mounting debt burdens and concerns about credibility.
Markets had brief moments of panic in 2025 as President Donald Trump openly criticized Powell, calling him “too late” and questioning the Fed chief’s ability to run the central bank.
“Our view has been that markets are concerned about threats to Fed independence but had become accustomed to hostile jawboning and would not trade on this fear absent some clear coordinating proof point,” Guha said. “The subpoenas and Powell’s response could very well be such a coordinating proof point.”