‘Sell America’ Trade Is Revived by Trump’s Latest Fed Attack

Core Viewpoint - The sentiment of "Sell America" has emerged in the markets following increased attacks by the Trump administration on the Federal Reserve, raising concerns about the central bank's independence in setting interest rates [1]. Market Reactions - The dollar, Treasuries, and US equities futures experienced declines after Fed Chair Jerome Powell indicated that a potential US criminal indictment was a result of disagreements over monetary policy [2]. - Bloomberg's dollar gauge fell by 0.3%, marking the largest drop since December 23, while S&P 500 futures decreased by 0.7% [4]. Investor Sentiment - Concerns regarding the Fed's independence are likely to create uncertainty around US monetary policy, prompting investors to diversify away from the dollar and consider traditional hedges like gold [3]. - Some strategists, including those from JPMorgan Asset Management, warned that the selloff could worsen if tensions escalate, predicting a steeper Treasury yield curve with long-term rates rising more than short-term rates [5]. Political Influence on Monetary Policy - The ongoing debate centers on the extent to which the US president can influence the nation's monetary policy, which has traditionally been insulated from political interference [6]. - Investors are reconsidering their exposure to US assets and the dollar, a trend reminiscent of market reactions following President Trump's announcement of universal tariffs last April [6].