Powell in the spotlight
The market has not taken the prospective prosecution of Fed Chair Jay Powell lightly. Before European markets had opened yesterday, Asian markets had been churning with news that the Federal Reserve Chairman was facing prosecution from the Department of Justice. That headline was seen as the latest escalation in a series of threats against Powell. Those threats in turn are seen as attempts to challenge the Fed’s independence from the government.
The latest challenge hasn’t formally challenged Powell’s role at the Fed with respect to the setting of monetary policy. Instead, the subpoena issued by the DoJ brings forward criminal proceedings against the Fed Chair relating to his role in championing the property renovation works at the Fed. You may recall images of an interview last year where Trump challenged Powell on the ballooning budget of such works. The market doesn’t buy the narrative that this judicial action isn’t about the White House’s distain for what it sees as unnecessarily and stubbornly high interest rates. Instead, they see it as the latest thinly veiled attempt to influence the central bank this time via the weaponisation of the judiciary.
Trump initially claimed to have played no role in the DoJ’s indictment of Powell. The Dollar took a leg lower shortly after midnight, in the early hours of Monday morning. The Dollar retains much of that discount today. Equities had also initially sold off but recovered most of their losses during yesterday’s session. This risk also increased curve steepening in the US which holds the prospect for further Dollar weakness if sustained.
Discussion and Analysis by Charles Porter
Related Insights
Daily Brief – Sterling defence
Charles Porter
Tue 28 Apr 2026
Sterling defence Options markets are flashing warning signals for Sterling. It’s no secret that the forthcoming Bank of England monetary policy decision later this week poses a risk for the Pound. However, there are risks mounting further afield. The local elections on May 7th are a material risk for GBP, for example, with traders concerned the […]
Daily Brief – Cancelled Travel Plans
Charles Porter
Thu 23 Apr 2026
Cancelled Travel Plans No, this time not because of the impending jet fuel crisis threatening continental travel as we discussed yesterday. Instead, I’m referring to the grounding of Vice President Vance whose trip to Islamabad, Pakistan was cancelled on Tuesday to avoid embarrassment. The Vice President was expected to travel on Tuesday to resume talks […]
Daily Brief – TACO or MACO?
Charles Porter
Tue 21 Apr 2026
TACO or MACO? On Friday markets received headlines of the supposed conclusion to the closure of the Strait of Hormuz. Despite the vast consequences of military action upon the region and beyond, it has repeatedly been the Strait that has been cast as the epicentre of economic (mis)fortune during this war. Therefore, the initial reaction […]
