US Stocks and Dollar Tumble as Trump’s Attacks on Fed Chair Powell Intensify
A significant sell-off in Wall Street stocks and a decline in the value of the dollar have been triggered by renewed attacks on Federal Reserve chair Jay Powell by US President Donald Trump. According to a report by the Financial Times, Trump’s comments on his Truth Social platform on Monday morning led to a sharp decline in US equities.
The S&P 500 ended the session 2.4% lower, with more than nine in 10 of its constituent stocks in negative territory. The tech-heavy Nasdaq Composite dropped 2.6%. The market moves came after Kevin Hassett, director of the National Economic Council, said on Friday that Trump would “continue to study” the matter of dismissing Powell after the president claimed the previous day that he had the right to fire the Fed chair.
The Financial Times reports that Trump has repeatedly criticised Powell for not lowering interest rates sufficiently swiftly, while the Fed chair has said he would never be influenced by political pressure. In a post on his Truth Social platform, Trump said Powell, whom he called “Mr Too Late”, should lower interest rates “NOW” to stimulate the economy.
The dollar fell as much as 1.5% to a three-year low against a basket of its big trading partners on Monday, while the euro gained 1.1% to $1.154 and the yen was 0.9% firmer at ¥140.84 per dollar. US sovereign debt sold off, with the yield on the 10-year US Treasury up 0.08 percentage points at 4.41% after Trump’s latest social media post.
According to Financial Times sources, analysts are concerned about the implications of Trump’s attacks on Powell, with Steven Grey, chief investment officer at Grey Value Management, saying: “The idea that Powell could be on the way out will definitely put real fear into the market. He’s a voice of sanity, a known quantity.”
The Financial Times also reports that Trump’s comments have raised concerns about the independence of the Federal Reserve, with Michael Feroli, chief US economist at JPMorgan, saying: “Any reduction in the independence of the Fed would add upside risks to an inflation outlook that is already subject to upward pressures from tariffs and somewhat elevated inflation expectations.”
Analysts at CICC, the Chinese investment bank, said in a report on Sunday that domestic US policy uncertainty was leading the dollar and Treasuries to “behave more like risk assets”. They added that Trump’s recent remarks about Powell “further heightened market concerns about the Federal Reserve’s independence”.
The Fed sets monetary policy independently of the other branches of government, and any attempt to oust Powell, whose term is scheduled to end in May 2026, or pressure monetary policy could cause further market turmoil in the US, according to investors and analysts.
In conclusion, the ongoing feud between Trump and Powell has significant implications for the US economy and financial markets. As the Financial Times reports, investors and analysts are closely watching the situation, and any further developments could have far-reaching consequences for the global economy.
Sources:
Financial Times
Additional reporting by Cheng Leng in Hong Kong.
Source link
