Global markets were jolted on Monday as investors reacted to mounting concerns over the political independence of the Federal Reserve.
Precious metals surged to record levels, the U.S. dollar weakened, and stock markets swung sharply as uncertainty took hold.
The volatility followed an announcement from Federal Reserve Chair Jerome Powell that he is under criminal investigation.
Market participants interpreted the move as a potential signal of President Donald Trump’s willingness to challenge the central bank’s autonomy.
Risk-Off Mood Takes Hold
“This is unambiguously risk off,” said Krishna Guha, head of global policy and central bank strategy at Evercore ISI.
Guha warned that a so-called “Sell America” trade could take shape, similar to the sharp selloff seen in April.
At that time, U.S. markets tumbled after Trump outlined plans for broad and aggressive tariffs.
He said global investors may now demand a higher risk premium for holding U.S. assets.
Safe Havens Surge
As stocks faltered, traditional safe-haven assets surged.
Gold and silver both climbed to all-time highs during the session, reflecting heightened demand for perceived stability.
Meanwhile, the U.S. dollar index slipped around 0.2%, underscoring pressure on American financial assets.
The Dow Jones Industrial Average fell nearly 500 points at its intraday low before recovering some ground.
“Clearly, the market doesn’t like it,” said Ed Yardeni, president of Yardeni Research.
JPMorgan Flags Multiple Pressure Points
JPMorgan’s trading desk identified the “Sell America” theme as a dominant driver of market action.
Beyond Powell’s investigation, attention has turned to an upcoming Supreme Court case.
The court is expected to hear arguments on whether Trump can fire Federal Reserve Governor Lisa Cook later this month.
Bank stocks also fell after Trump proposed a one-year cap of 10% on credit card interest rates.
“Combined, the ‘Sell America’ theme may be the dominant narrative,” JPMorgan wrote to clients.
Powell Pushes Back
In a video statement, Powell framed the investigation as retaliation for policy decisions made in the Fed’s view of economic stability.
He said interest rates were set based on what officials believed was best for the economy.
Trump has repeatedly criticised Powell, arguing rates are too high and openly floating the idea of removing him.
Economists have widely defended Powell, calling the probe an attack on the Fed’s apolitical standing.
Former Fed Chair Janet Yellen said she was “surprised the market isn’t more concerned.”
Volatility Rises, But Conviction Lags
The CBOE Volatility Index rose during the session, signalling increased anxiety among traders.
However, it remained within its recent range, suggesting uncertainty over whether the situation will escalate.
Stocks recovered from their lows by late morning, with the S&P 500 eventually reaching a new all-time high.
International markets outperformed U.S. equities, reinforcing concerns tied specifically to American policy risk.
“Volatility is likely to dominate markets in the near term,” said Mark Malek of Siebert Financial.
