KEY POINTS
- US stock futures fell sharply, with Dow futures down 350 points and S&P 500 futures down 0.6 percent.
- Treasury yields rose while the dollar weakened, reflecting investor concerns about political interference in monetary policy.
- Gold surged above $4,600 per troy ounce, marking record highs amid the “debasement trade” of hard assets.
Wall Street opened lower Monday as investors responded to a renewed threat to Federal Reserve independence, following the Trump administration’s criminal investigation of Fed Chair Jerome Powell.
Stocks, US bonds, and the dollar all fell in early trading, signaling heightened market risk and sparking a surge in safe-haven assets such as gold and silver.
Investors reacted decisively Monday to President Donald Trump’s intensified pressure on the Federal Reserve, resurrecting the so called “Sell America” trade.
This trade strategy, characterized by selling US equities, bonds, and the dollar, highlights the importance of perceived central bank independence in maintaining global confidence in American markets.
“Markets are responding to a tangible signal that the independence of the Fed may be compromised,” said Krishna Guha, vice chairman at Evercore ISI.
“The subpoenas and Powell’s public response may serve as a coordinating proof point that triggers risk off behavior.”
The US Federal Reserve’s autonomy is widely regarded as a cornerstone of financial stability.
Historically, political interference with monetary policy has been linked to higher volatility, inflationary pressures, and reduced investor confidence.
In 2025, similar fears triggered a sell off when Trump criticized Powell for not lowering interest rates as quickly as the administration desired.
At that time, the dollar and US Treasuries fell sharply, and equities approached bear market territory before rebounding after tariff threats were eased.
Monday’s market reaction echoes that period, suggesting investors remain sensitive to political developments affecting the Fed’s policy independence.
Market analysts emphasize that moves against the Fed could undermine long term confidence in US financial assets.
A central bank that is perceived as politically influenced may be slower to respond to inflation or economic shocks, prompting investors to demand higher returns for U.S. assets.
“Lowering rates prematurely can destabilize markets,” said Michael Feroli, chief US economist at JPMorgan Chase. “Investors are pricing in uncertainty that affects everything from bond yields to the dollar and risk premiums on equities.”
Investors are also turning to precious metals as a hedge. Gold and silver are traditionally seen as stores of value immune to policy risk, prompting the sharp gains observed Monday.
| Asset | Current Level (Jan 12, 2026) | Change vs Previous Close | 1-Month Trend | Notes |
|---|---|---|---|---|
| Dow Futures | 50,200 | -350 points (-0.7%) | Volatile | Early sell-off tied to Fed concerns |
| S&P 500 Futures | 6,130 | -0.6% | Flat to down | Investors applying higher risk premium |
| Nasdaq Futures | 15,450 | -0.9% | Slight downtrend | Tech stocks particularly sensitive |
| 10-Year Treasury Yield | 4.19% | +0.06 pts | Rising | Yields increase as bond prices fall |
| U.S. Dollar Index | 101.2 | -0.4% | Weakening | Dollar under pressure against major currencies |
| Gold | $4,605 | +2% | New record highs | Safe-haven “debasement trade” |
| Silver | $112 | +6% | Strong gain | Outpaced gold in volatility |
“Investors are increasingly wary of political interference,” said Sheila Patel, senior strategist at BlackRock.
We are seeing an immediate rotation into gold, silver, and other safe haven assets as confidence in US fiscal and monetary stability is tested.
Fed Chair Jerome Powell, in a brief statement Sunday evening, reaffirmed the Fed’s commitment to independent policy decisions.
“Monetary policy decisions will continue to be based on economic data, not political considerations,” Powell said.
Krishna Guha of Evercore ISI added, “The market is marking risk across equities, bonds, and the currency simultaneously, reflecting the coordination between political signals and investor behavior.”
Analysts note that ongoing scrutiny of the Fed could continue to unsettle global markets. Investors are monitoring potential legislative or legal developments that may signal further political influence on monetary policy.
Safe haven assets and US Treasury yields are likely to remain sensitive to any announcements or subpoenas related to the investigation.
“The current environment underscores how political developments in Washington can reverberate across global financial markets,” said Feroli.
Monday’s sell off highlights the enduring significance of Federal Reserve independence in global investor confidence.
While equities, bonds, and the dollar experienced immediate pressure, safe haven assets rallied, reflecting broader concerns about political influence on US monetary policy.
Financial markets and policymakers will likely continue to navigate the delicate balance between political oversight and institutional autonomy in the months ahead.
Author’s Perspective
In my analysis, the revival of the “Sell America” trade highlights how political pressure on the Fed can rapidly shift global capital flows and investor confidence.
Markets are signaling that central bank independence remains a critical anchor for financial stability.
I predict stronger legal safeguards and transparency measures around Fed governance, which could reshape Treasury yields and currency volatility.
For businesses and consumers, this means borrowing costs may swing unexpectedly, making liquidity planning essential.
Track Fed statements and Treasury yields closely, and consider safe haven allocations like gold or TIPS to mitigate policy driven risk.
NOTE! This report was compiled from multiple reliable sources, including official statements, press releases, and verified media coverage.
