Wall Street is once again flirting with the so-called “Sell America” trade after renewed political pressure on the Federal Reserve rattled investor confidence. Markets moved sharply lower following news that federal prosecutors have opened a criminal investigation involving Federal Reserve Chair Jerome Powell, a development tied to the Trump administration’s escalating confrontation with the central bank.
U.S. stock futures slid early Monday, signaling a risk-off mood across markets. Dow futures fell about 350 points, while S&P 500 and Nasdaq futures dropped roughly 0.6% and 0.9%, respectively. At the same time, investors began pulling back from other core U.S. assets, including the dollar and government bonds.
The U.S. dollar weakened noticeably against major global currencies. The dollar index, which measures the greenback against six major peers, declined around 0.4%—a significant move for a currency that is typically viewed as a safe haven. Treasury bonds also sold off, pushing the yield on the benchmark 10-year note to just under 4.2%, near its highest level in a month. Rising yields signal falling bond prices and suggest investors are demanding higher returns to hold U.S. debt amid growing uncertainty.
At the heart of the market reaction is concern over the Federal Reserve’s independence, long viewed as a cornerstone of U.S. financial stability. An independent central bank reassures investors that monetary policy decisions—such as setting interest rates—are driven by economic conditions rather than political pressure. Any perceived erosion of that independence can quickly unsettle markets.
The Trump administration has repeatedly criticized Powell for not cutting interest rates aggressively enough, arguing that lower rates would reduce borrowing costs for consumers and stimulate growth. Critics counter that pressuring the Fed to move too quickly risks reigniting inflation, which could ultimately force rates higher and undermine confidence in U.S. assets.
“This is unambiguously risk-off,” said Krishna Guha, vice chairman at Evercore ISI, describing the market’s reaction. He noted that investors appear to be assigning a higher risk premium to American assets as political tensions surrounding the Fed intensify.
Monday’s moves echo the “Sell America” episode of spring 2025, when fears over Trump’s trade policies and earlier threats to Powell sparked a broad retreat from U.S. stocks, bonds, and the dollar. At that time, markets stabilized only after the administration softened some of its most aggressive tariff proposals.
This time, analysts warn the consequences could be similar—or worse—if confidence in the Fed continues to erode. Guha said global investors may again respond by reducing exposure to U.S. markets while rotating into traditional safe havens.
That shift was already evident in commodities. Gold surged about 2% to record highs above $4,600 an ounce, while silver jumped even more sharply, climbing roughly 6%. The rally reflects what traders call the “debasement trade,” where investors seek refuge in hard assets amid fears that political interference, rising debt, and credibility concerns could weaken currencies and bonds over time.
Markets had largely grown accustomed to Trump’s verbal attacks on Powell throughout 2025, often dismissing them as political “jawboning.” However, analysts say the opening of a criminal investigation marks a more concrete escalation—one that investors cannot easily ignore.
“The subpoenas and Powell’s response could very well be the proof point markets were waiting for,” Guha said.
As trading unfolds, investors will be watching closely to see whether this renewed “Sell America” trade deepens—or whether policymakers can restore confidence before market anxiety turns into something more lasting.
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