Global markets adjusted rapidly after reports of a criminal investigation involving Jerome Powell, placing unexpected institutional risk at the center of investor focus. Stocks, bonds, and the dollar moved lower together as investors reduced exposure tied to US policy credibility.
This shift appeared measured rather than frantic, suggesting a reassessment of the framework supporting US markets rather than fear around individual assets. US equities opened weaker at the start of the week, yet the uniform nature of the move drew greater attention on Wall Street.
There was no sector rotation and no clear flight into defensive stocks. Instead, investors broadly trimmed risk across markets linked to US governance stability.
At the same time, the US dollar fell against major currencies, a move that stood out during a period of market stress. The dollar often strengthens during uncertainty, yet this time, it weakened instead. That divergence signaled growing concern about confidence in US institutions instead of global growth fears.
According to a report by CNN, stocks later recovered some losses while the dollar remained under pressure. The dollar index fell 0.24 percent as it tracked performance against six major currencies; such persistence suggested the adjustment extended beyond a short-term equity reaction.
Meanwhile, US Treasury markets also reflected the shift in sentiment. The benchmark 10-year yield rose to 4.19 percent, near a one-month high, as prices declined. Rising yields indicated investors demanded higher compensation to hold US government debt.
The bond move also raised questions about policy expectations, with the increase suggesting interest rates may not fall as quickly as President Trump has urged. Traders appeared to price in potential consequences from political pressure on the Federal Reserve.
Traditional assets lost their value, but at the same time, safe havens received strong demand from global markets. There was a 2.5% increase in gold futures, which then reached a new high above $4,600 per troy ounce. Silver prices increased by 7.3% and its intraday record was above $86 per troy ounce.
The metals' rally was concurrent with the dollar's and Treasuries' continued pressure. This combination indicates that investors want to protect themselves from political or institutional uncertainty. Price activities indicated readiness for possible volatility and not just a short reaction.
CNN reported many stock investors have continued to shrug off the Justice Department probe. Paul Ashworth of Capital Economics said markets may expect challenges to Fed independence to fail. Even so, movements across currencies, bonds, and metals pointed to caution beneath the surface.
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Federal Reserve independence remains a core pillar of US financial credibility among investors, economists, and historians. An autonomous central bank allows monetary policy decisions without political direction, supporting confidence in long-term market stability and predictable policy outcomes.
The Trump administration has openly criticized the Fed for not cutting rates faster. Those public attacks intensified last year as political pressure on monetary policy grew. Markets previously learned to discount hostile rhetoric without concrete action.
Veteran investors recalled a brief ‘Sell America’ trade in early 2025 tied to trade disputes and Fed threats. That episode reversed only after tensions eased and confidence partially returned. This time, investors reacted to a tangible development rather than language alone.
What happens when trust in central bank independence begins to erode?
US markets adjusted after concerns over Federal Reserve independence triggered a rare joint decline in stocks, bonds, and the dollar. Gold and silver rallied as investors sought protection.
Reactions remained orderly but signaled a rising sensitivity to institutional stability within the United States. How will the market react if there are doubts around the Federal Reserve?