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Wall Street stocks and the dollar fell amid increasing uncertainty over the US economy as President Donald Trump renewed his attack on Federal Reserve Chairman Jay Powell.
US stocks opened on Monday, and sales intensified as Trump targeted central bankers. The S&P 500 fell 3% during lunchtime trading in New York, while the high-tech NASDAQ composite fell 3.4%.
In a post on his true social platform on Monday morning shortly after the market opened, Powell, whom Trump called “Mr Mr Too Deter,” said interest rates should be reduced “now” to stimulate the economy.
The market moves say that Kevin Hassett, director of the National Economic Council, on Friday he will “continue to study” the issue of dismissing Powell after Trump claimed he was entitled to fire the Fed chairman the day before.
Trump has repeatedly criticised Powell for not lowering interest rates quickly enough, but the Fed chair said he would never be affected by political pressure.
“If you don’t think it’s acceptable for President Trump to be unhappy with the Fed’s policy history, I think you explained to him to do so,” Hassett told reporters in Washington on Friday.
The dollar fell 1.5 percent to its three-year low on its major trading partner basket on Monday, with the euro increasing its 1 percent to $1.151, while the yen increased its 1 percent to 140.82 yen against the dollar.
US sovereign debt remained weak that day, but trimmed some of its previous losses. The US Treasury’s 10-year yield rose 0.06 percentage points at 4.39% after Trump’s latest social media post. Bond yields move inversely to the price.
Macquarie’s global forex and interest rate strategist Thierry Withman said Monday’s “flight from the dollar” was driven by growing concerns about federal independence and Washington’s lack of progress in trade transactions.
He cited the growth outlook for “deteriorating” in stock declines, adding that “flights to gold are declining as the willingness to curb US consumer prices inflation is declining. [and] Long-term backup [Treasury] yield”.
Yujiro Goto, a forex strategist at Nomura Securities, said that bond sales and currency depreciation are rare in major reserve currency markets such as the US.
GoTo believes the rise in the yen is attributed to US concerns about “distrust in the credibility of stags” and “increasing credibility of male dogs.”
In a report on Sunday, analysts at CICC, a Chinese investment bank, said uncertainty in U.S. policies in the country has led to the dollar and the Treasury “behavioring like a risky asset.”
They added that Trump’s recent remarks about Powell “has raised market concerns about the independence of the Federal Reserve.”
The central bank has put on rates so far this year after three cuts in 2024. The next meeting will be in May.
The Fed sets monetary policy independent of other sectors of the government. According to investors and analysts, attempts to expel Powell, whose term is due to end in May 2026, or pressure monetary policy, could cause disruption to the US market.
Additional Reports by Cheng Leng in Hong Kong
