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Bloomberg

The American stocks sell-off deepened on Monday after US President Donald Trump stepped up his haranguing of Jerome Powell on social media.
The president’s threats to remove the Federal Reserve chairman have also been weighing on longer-dated Treasuries and the dollar.
The S&P 500 sank 1.9 per cent and the dollar index weakened to a 15-month low as Wall Street reopened after the long holiday weekend. Long bonds fell, pushing the 10-year yield close to 4.4 per cent.
As investors turned away from US securities, haven assets climbed. Gold jumped to another record, above US$3,400 an ounce, while the Swiss franc led a rally in other Group-of-10 currencies.
The US president took to social media to escalate his attack on the Fed chairman, insisted there was “virtually” no inflation and said it was time for “pre-emptive cuts”. The last reading of the Fed’s preferred inflation gauge remains above the central bank’s target, the next readout comes next week.
National Economic Council Director Kevin Hassett said on Friday that Trump was studying whether he is able to fire Powell.
The comments raised new questions about whether the Fed can maintain its long-standing independence, with the president increasingly venting dissatisfaction in harsh terms that the central bank has not moved faster to lower interest rates.

“Were Powell to be fired, the initial reaction would be a huge injection of volatility into financial markets, and the most dramatic rush to the exit from US assets that it is possible to imagine,” said Michael Brown, senior research strategist at Pepperstone.
“Not only is the independence of the Fed clearly under threat, but the prospect of de-dollarisation and a move away from US hegemony is an increasingly realistic one.”
It is a fear that is being echoed by hedge fund elites. Paul Singer, founder of Elliott Investment Management, warned recently at a private event in Abu Dhabi that the US dollar might lose its reserve currency status, according to people present.
Rebuking the Fed risks politicising US monetary policy in a way that markets find deeply unsettling, said Christopher Wong, a currency strategist at Oversea-Chinese Banking Corp.
“Frankly, firing Powell stretches belief,” Wong said. “If the credibility of the Fed is called into question, it could severely erode confidence in the dollar.”
The Bloomberg Dollar Spot Index slid 0.8 per cent on Monday. Every Group-of-10 currency gained against the US dollar. The jump in the yen weighed on stock indexes in Japan, pushing the Nikkei 225 down 1.3 per cent.
The yen, euro and Swiss franc rallied. WTI crude fell more than 2 per cent to below US$64 a barrel. European stock markets were largely still shut for a public holiday.
Fed Chicago president Austan Goolsbee warned against efforts to curtail the central bank’s independence.
“There’s virtual unanimity among economists that monetary independence from political interference – that the Fed or any central bank be able to do the job that it needs to do – is really important,” Goolsbee said on CBS’ Face the Nation on Sunday.


Legal scholars said that a president cannot dismiss a Fed chair easily, and Powell has previously said he would not resign if asked by Trump.
In a sign that investors are rotating investments away from the US, Deutsche Bank AG said Chinese clients have reduced some of their Treasuries holdings in favour of European debt.
European high-quality bonds, Japanese government bonds and gold were likely to be the potential choices for investors as alternatives to Treasuries, said Lillian Tao, head of China macro and global emerging market sales at the bank.
Tesla slipped 4 per cent in premarket trading. Wedbush Securities analyst Dan Ives said the company faced a “code red” moment as it prepared to report earnings on Tuesday, and that Elon Musk should step back from his work at the Department of Government Efficiency to focus on Tesla.


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United States

Trump’s Fed feud sparks Wall Street sell-off, dollar dips, gold hits record high

A trader works on the floor of the New York Stock Exchange at the opening bell on Monday. Photo: AFP

Federal Reserve chairman Jerome Powell, left, and US President Donald Trump. Photo: AFP

Trump studying whether to fire Federal Reserve chief Jerome Powell, adviser says

US Federal Reserve Chair Jerome Powell speaks during a press conference, in Washington in January. Photo: Reuters

A Trump bobblehead sits on a desk as traders works on the floor of the New York Stock Exchange on Tuesday. Photo: TNS

Economic adviser Kevin Hassett speaks to reporters at the White House on Friday. Photo: AP

Trump slams US Fed chair Powell, urges ‘termination’ for slowness

US Federal Reserve Chair Jerome Powell speaks at the Economic Club of Chicago on Wednesday. Photo: AFP

US President Donald Trump (left) and Fed chair Jerome Powell at the White House in 2017. Photo: Reuters

S&P 500, Nasdaq gain on boost from US-Japan tariff talks

Traders work at the New York Stock Exchange on Thursday. Photo: Reuters

A trader at the New York Stock Exchange. Healthcare shares led sectoral declines on Thursday. Photo: AFP

Trump goes to war with the US Federal Reserve: a ‘recipe for disaster’?

The headquarters of the US Federal Reserve in Washington. The Fed system is designed to insulate the US central bank from political interference. Photo: Kyodo

US Federal Reserve Chair Jerome Powell speaks at the Economic Club of Chicago on April 16. Powell has said he has no plans to step down early. Photo: TNS

Dow drops 1,600 as US stocks lead worldwide sell-off from Trump tariffs

Traders on the floor at the Opening Bell of the New York Stock Exchange on Thursday. Photo: EPA-EFE

News

World

United States & Canada

Gold soared as investors fled US assets amid fears of Federal Reserve interference


Gold soared as investors fled US assets amid fears of Federal Reserve interference.
