US stock futures added to losses early on Monday amid concerns over Federal Reserve independence after Chair Jerome Powell said the Trump administration has threatened him with a criminal indictment.
Dow Jones Industrial Average futures (YM=F) fell 0.6%, while those on the S&P 500 (ES=F) sank roughly 0.8%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) led the way lower, tumbling 1.1% on the heels of record closing highs for Wall Street stocks.
Investors were rattled late Sunday after Powell released a statement revealing that the Department of Justice had subpoenaed the US central bank.
In a rare video, Powell said “the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June.”
Powell suggested the move was a direct attack on the Fed for the setting of interest rates that “serve the public” rather than “following the preferences of the President.”
The significant escalation in Trump’s feud with the Fed chair comes as markets are bracing for the latest consumer inflation report, due Tuesday. The release comes on the heels of Friday’s December jobs report, which showed continued cooling in the labor market without signaling a sharp economic slowdown.
Taken together, the data has reinforced expectations that the Federal Reserve will remain on hold for now, with CME FedWatch offering a 95% probability of rates staying the same.
Beyond the economic calendar, geopolitical developments remain a wildcard. Trump is reportedly weighing potential action involving Iran, while also escalating pressure on Cuba over Venezuelan oil shipments. Late last week, Trump also renewed controversial comments about Greenland, saying the US could pursue control of the Danish territory “whether they like it or not.”
Investors are now turning their attention to the first major catalysts of 2026: earnings season and key inflation data. Several of Wall Street’s biggest banks are set to report in the coming days, including JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), Citigroup (C), Goldman Sachs (GS), and Morgan Stanley (MS).
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Bloomberg reports:
The dollar (DX-Y.NYB) declined the most in almost three weeks as the Federal Reserve faced grand jury subpoenas from the Justice Department, reviving concerns over political interference in monetary policy.
The Bloomberg Dollar Spot Index fell 0.3% on Monday, set for its biggest drop since Dec. 23. That’s after Fed Chair Jerome Powell revealed the central bank had been served grand jury subpoenas, threatening a criminal indictment tied to his June testimony on headquarter renovations.
… Escalating tensions are fueling anxiety over the central bank’s autonomy, potentially upending the bullish options sentiment seen at the start of the year. The dollar opened 2026 with a strong bias, particularly against the euro, a distinct shift from December’s dynamics. That leaves short-term positioning vulnerable to a further unwind amid the latest developments.
The dollar’s position as the world’s reserve currency depends on institutional trust, Nigel Green, chief executive officer of financial-advisory firm deVere Group, wrote in a note. “History teaches that countries that allow political leaders to dominate central banks pay a heavy economic price.”
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Reuters sourced the following comments from analysts and investors about the Trump administration’s move against Federal Reserve chair Jerome Powell:
VISHNU VARATHAN, HEAD OF MACRO RESEARCH, ASIA EX-JAPAN, MIZUHO, SINGAPORE
“The Fed independence question is now well and alive and maybe subject to re-evaluation every few meetings.
“I think I’m still not sure how sustained and adversarial the attack on the Fed might be. There could be a scenario where Trump could still appoint someone with some credibility and allow this person to run the show – so that’s probably why markets aren’t panicking as yet.”
ANDREW LILLEY, CHIEF RATES STRATEGIST AT BARRENJOEY, SYDNEY
“Trump is pulling at the loose threads of central bank independence. I don’t even believe that he expects that Chair Powell will be charged… The only reason that he’s taking these steps is that he knows that he’s not going to take control of the Fed, so he wants to exert as much undue pressure as he can.
“It is not good. Don’t get me wrong, but I think it will amount to nothing. Investors won’t be happy about it, but it shows actually Trump has no other levers to pull. The cash rate will stay what the majority of the FOMC wants them to be.”
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Bloomberg reports:
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Bloomberg reports:
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Associated Press reports:
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