Fed Subpoenas Spark Renewed ‘Sell America’ Trend Amid Worries Over Independence

Market Turmoil as US Administration Intensifies Pressure on Federal Reserve

Global markets experienced a wave of "Sell America" sentiment on Monday, following renewed criticism of the Federal Reserve by the Trump administration. This heightened scrutiny has sparked fresh concerns about the central bank’s independence in determining interest rates.

During early Asian trading hours, the US dollar, Treasury bonds, and futures tied to American stocks all declined. This came after Fed Chair Jerome Powell revealed that the possibility of facing criminal charges—stemming from his congressional testimony regarding renovations at the Fed’s headquarters—was linked to ongoing policy disputes. The latest move adds to a series of confrontations with the central bank, including attempts to dismiss Governor Lisa Cook and persistent demands for substantial rate reductions.

This market downturn has reignited debate over the appropriate level of presidential influence on US monetary policy—a domain that has traditionally been shielded from political pressures to maintain economic stability. Investors are now reconsidering their exposure to US assets and the dollar, echoing concerns that surfaced last April when President Trump introduced sweeping tariffs.

“Any event that casts doubt on the Fed’s autonomy introduces more unpredictability into US monetary policy,” commented Gary Tan, a portfolio manager at Allspring Global Investments, which manages over $600 billion. “Such developments are likely to accelerate the move away from the dollar and boost interest in classic safe havens like gold.”

Bloomberg’s dollar index dropped by up to 0.2% during Asian trading, with the greenback weakening against nearly all major currencies. As of 3 a.m. Monday in New York, S&P 500 futures were down 0.5%, while Nasdaq 100 futures slipped 0.8%.

In early London trading, yields on benchmark 10-year US Treasuries rose by two basis points, and 30-year yields increased by four basis points.

For investors, these developments suggest increased market volatility, with long-term monetary policy now in question. JPMorgan Asset Management anticipates a steeper Treasury yield curve as markets expect more aggressive rate cuts. Lombard Odier predicts additional downward pressure on both the dollar and Treasuries, while Invesco Asset Management sees greater appeal in non-US assets, such as European and Asian equities.

Spotlight on the Dollar’s Global Role

The current situation has brought renewed attention to the US dollar, which serves as the backbone of international trade and accounts for nearly 90% of global currency transactions. Last week, Francois Villeroy de Galhau, a member of the European Central Bank’s Governing Council, cautioned that the administration’s criticism of the Fed could undermine the dollar’s global standing.

“If markets revisit strategies from 2025 to seek alternatives to the dollar, the euro could see short-term gains, potentially establishing a floor for EUR/USD. This mirrors the reaction during the April 2025 tariffs, when both the euro and gold benefited as investors sought liquid alternatives to the dollar,” noted Adam Linton, macro strategist.

Roots of the Dispute

The ongoing conflict traces back to President Trump’s persistent disagreements with Powell. The president has urged the Fed to lower rates more rapidly to stimulate growth and reduce government borrowing costs, while Fed officials have remained cautious about inflation risks. The legacy of Paul Volcker, who led the Fed starting in 1979, is often cited—he is remembered for battling inflation that many believe was exacerbated by the Fed yielding to political pressure under President Nixon.

Market Reactions and Political Motives

“This news could once again trigger a ‘Sell America’ trend as markets open,” observed Gerald Gan, chief investment officer at Reed Capital Partners in Singapore. He suggested that the administration’s actions are aimed at regaining public support ahead of the midterm elections, even if it means compromising institutional credibility.

US Assets Face Headwinds

US investments came under pressure last year after Trump’s abrupt tariff announcement sent markets reeling. Treasury yields surged in April, with 30-year yields jumping over 80 basis points in a single day between Liberation Day and late May. The dollar suffered an 8% drop in 2025, marking its largest annual decline since 2017.

“The Fed subpoena is yet another sign that US assets are losing their appeal,” said David Chao, global market strategist at Invesco Asset Management, which manages over $2 trillion. “Not only is the US turning inward, but its approach is also becoming more aggressive.”

In a recent interview with NBC News, Trump denied any knowledge of the Justice Department’s investigation into the central bank.

Some analysts urge caution, noting that the dollar’s status as a reserve currency, the deep liquidity of Treasuries, and the ongoing AI-driven stock rally could make any market pullback a buying opportunity. “While independence is always a concern, we’ll monitor the situation and act when the economic impact becomes clearer,” said Marvin Loh, senior macro strategist at State Street in Boston.

Nevertheless, the “Sell America” narrative is expected to persist as 2026 trading begins.

Hebe Chen, senior market analyst at Vantage Global Prime Pty., remarked that the investigation into Powell currently appears to be more “smoke than fire,” but its deeper and longer-term consequences could be significant.

Additional Reporting

Reporting contributed by Richard Henderson and Matthew Burgess.

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