'Sell America' trade returns as Trump's DOJ probes Powell

Core Viewpoint - The U.S. dollar and stock futures declined while gold prices surged, indicating a return to the "Sell America" trade following the Department of Justice's criminal investigation into Federal Reserve Chair Jerome Powell [1][2]. Market Reactions - S&P 500 futures fell by 0.6% and the dollar decreased nearly 0.5% against the euro, while gold reached a record high, surpassing $4,600 per ounce for the first time [2]. - Economists expressed concerns that the DOJ's investigation could undermine the independence of the Federal Reserve [2][3]. Federal Reserve Independence Concerns - Goldman Sachs' chief economist highlighted that the investigation has intensified worries regarding the Fed's independence [3]. - Powell asserted that his decisions will be based on economic data, unaffected by external pressures [4]. Investigation Details - The DOJ issued grand jury subpoenas to the Fed related to Powell's testimony about renovations at the Fed's headquarters [5]. - This investigation is seen as a significant escalation in President Trump's efforts to influence the central bank's interest rate decisions [5]. Political Implications - The return of the "sell-America trade" is reminiscent of previous market reactions during heightened tensions between Trump and the Fed [6]. - Senator Thom Tillis opposed the investigation, which could complicate Trump's plans to nominate a successor for Powell [6]. - Tillis emphasized that the independence of both the Federal Reserve and the Department of Justice is now in question [7].