Markets Embrace ‘Sell America’ as Fed Independence Questioned
‘Sell America’ sentiment swept through markets on Monday following the Trump administration’s intensified criticism of the Federal Reserve, raising concerns about the independence of the central bank. The dollar, Treasuries, and US equities futures all experienced a decline in early Asia trading following Chair Jerome Powell’s statement regarding the potential consequences of a US criminal indictment stemming from a disagreement over monetary policy. The action represents the latest in a series of confrontations with the central bank, including attempts to dismiss Governor Lisa Cook and ongoing demands for substantial interest rate reductions. The uniform selloff reignites the discussion regarding the extent to which the US president can and should impact the nation’s rate stance, traditionally viewed as the exclusive domain of the Fed. The situation is reigniting discussions about whether investors ought to lessen their exposure to US assets and the dollar — a topic that significantly influenced global markets last April when President Donald Trump declared universal tariffs.
“Any development that raises questions about the Fed’s independence adds uncertainty around US monetary policy,” stated Gary Tan. “This is likely to reinforce existing trends of diversification away from the dollar and increase interest in traditional hedges such as gold.” Powell stated that the grand jury subpoenas pertain to his June congressional testimony regarding the ongoing renovations of the Fed’s headquarters, but should be considered “in the broader context of the administration’s threats and ongoing pressure.” The escalation creates an environment ripe for increased market volatility, considering its potential implications for long-term monetary policy. The focus is on the dollar, which serves as the foundation of global trade and constitutes nearly 90% of foreign exchange transactions. Francois Villeroy de Galhau cautioned last week that the administration’s critique of the Fed poses a risk to the greenback’s position.
“Macro traders are poised to embrace US dollar shorts, given the potential challenges Powell may face in executing his responsibilities as Fed chair.” Mark Cranfield. Explore further on MLIV. Dollar gauge experienced a decline of up to 0.2% during Asia trading, as the greenback weakened against nearly all Group-of-10 currencies. S&P 500 futures fell by 0.6% as of 1:18 a.m. Monday in New York, while contracts on the Nasdaq 100 decreased by 0.9%. US Treasuries futures experienced a decline. Cash trading is halted because of a holiday in Japan, prompting investors to prepare for the London open. “The news could once again propagate the ‘Sell America’ narrative as we approach the opening bell,” stated Gerald Gan. The dynamics illustrate an administration “focused on regaining public approval ahead of the midterm elections, even at the expense of institutional credibility.” US assets faced significant pressure last year following Trump’s abrupt global tariff announcement, which triggered a market downturn. Treasury yields surged following the announcement of the levies in April, with 30-year yields climbing over 80 basis points on an intraday basis from the so-called Liberation Day to late May.
The dollar experienced a decline of over 8% in 2025, marking its most significant annual drop since 2017. Strategists and investors caution that the selling may intensify if tensions persist at elevated levels. JPMorgan Asset Management indicates that the news is expected to lead to a further steepening of the Treasury yield curve. Lombard Odier anticipates increased pressure on the dollar and Treasuries. Invesco Asset Management states that non-US assets, such as European and Asian equities, appear to be more favorable. “The Fed subpoena is another example of how US assets are becoming less attractive,” said David Chao. “Not only is the US retrenching behind its Fortress America borders, the country is also becoming more predatory.” In an interview on Sunday, Trump stated, “I have no knowledge of the Department of Justice’s investigation into the central bank.” Some are adopting a more cautious perspective, noting that the robust status of the dollar as a reserve currency, the substantial liquidity in Treasuries, and the surge in artificial intelligence driving stock performance suggest that any pullback might present a buying opportunity. “While we are always concerned with independence, it is something we will watch and make decisions when there is a more definable economic outcome,” stated Marvin Loh. Nonetheless, the pressures of ‘Sell America’ are expected to persist as trading commences for 2026. Powell’s investigation looks “more like smoke than fire” right now, said Hebe Chen, senior market analyst at Vantage Global Prime Pty., but how long that lasts is up for debate. “Its longer-term and more deep-rooted implications are far more profound,” she added.
