Fed Subpoenas Revive ‘Sell America’ Trade on Autonomy Concerns
‘ ’ sentiment swept through markets on Monday after the Trump administration escalated its attacks on the Federal Reserve, fueling concerns over central bank autonomy.
The , Treasuries and US equities futures all slid in early Asia trading after Chair Jerome Powell the threat of a US criminal indictment was a consequence of a disagreement over monetary policy. The action is the latest in a series of confrontations against the central bank, from efforts to fire Governor Lisa Cook to repeated calls for aggressive interest rate cuts.
The uniform selloff revives debate over just how far the can and should influence the nation’s rate stance, long seen as the sole purview of the Fed. It is also reviving questions on whether investors should reduce exposure to US assets and the dollar — a theme that dominated global markets last April when President Donald Trump announced universal tariffs.
“Any development that raises questions about the Fed’s independence adds uncertainty around US monetary policy,” said Gary Tan , portfolio manager at Allspring Global Investments, which oversees more than . “This is likely to reinforce existing trends of diversification away from the dollar and increase interest in traditional hedges such as gold.”
Powell said the grand jury subpoenas relate to his June congressional testimony on ongoing renovations of the Fed’s headquarters, but should be viewed “in the broader context of the administration’s threats and ongoing pressure.”
For investors, the escalation sets the stage for heightened market volatility given the potential impact for long-term monetary policy. It casts a spotlight on the dollar, which underpins world trade and makes up nearly of foreign exchange transactions. European Central Bank Governing Council member Francois Villeroy de Galhau last week that the administration’s criticism of the Fed is threatening the greenback’s role.
Bloomberg’s dollar gauge fell as much as 0.2% in Asia trading, with the greenback weakening against almost every Group-of-10 currency. S&P 500 futures slid 0.6% as of 1:18 a.m. Monday in New York, while contracts on the Nasdaq 100 declined 0.9%.
US Treasuries futures also fell. Cash trading is closed due to a Japan holiday, spurring investors to position for the London open.
“The news could once again propagate the ‘Sell America’ narrative as we approach the opening bell,” said Gerald Gan , chief investment officer at Singapore-based Reed Capital Partners. The dynamics reflect an administration “focused on regaining public approval ahead of the midterm elections, even at the expense of institutional credibility.”
Less Attractive
US assets came under strain last year when Trump’s sudden global tariff announcement sent markets into a tailspin. Treasury yields had spiked when the levies were announced in April, with 30-year yields soaring more than 80 basis points on an intraday basis between the so-called Liberation Day to late May. The dollar tumbled more than 8% in 2025, its steepest annual decline since 2017.
Strategists and investors warn the selling could deepen if tensions continue to run hot. JPMorgan Asset Management says the news will likely prompt further steepening of the Treasury yield curve. Lombard Odier sees the dollar and Treasuries coming under more pressure. Invesco Asset Management says non-US assets like European and Asian equities look more favorable.
“The Fed subpoena is another example of how US assets are becoming less attractive,” said David Chao , global market strategist at Invesco Asset Management, which oversees more than in assets. “Not only is the US retrenching behind its Fortress America borders, the country is also becoming more predatory.”
In an interview with NBC News on Sunday, Trump denied having any knowledge of the Department of Justice’s investigation into the central bank.
Some are taking a more cautious view, saying that given the strong positioning of the dollar as a reserve currency, the deep liquidity in Treasuries and the artificial intelligence boom powering stocks, any pullback could be an opportunity to buy. “While we are always concerned with independence, it is something we will watch and make decisions when there is a more definable economic outcome,” said Marvin Loh , senior macro strategist at State Street in Boston.
Still, ‘Sell America’ pressures are unlikely to go away as trading gets underway for 2026.
Powell’s investigation looks “more like smoke than fire” right now, said Hebe Chen , senior market analyst at Vantage Global Prime Pty., but how long that lasts is up for debate. “Its longer-term and more deep-rooted implications are far more profound,” she added.
