‘Sell America’ returns to Wall Street after Trump ups the ante against Jerome Powell and the Fed

New York (CNN) — Investors took one look at the Trump administration’s criminal investigation of Federal Reserve Chair Jerome Powell and decided to resuscitate the “Sell America” trade, selling off US stocks, bonds and the dollar.

Stocks were slightly lower Monday morning. The Dow was down 159 points, or 0.32%. The broader S&P 500 fell 0.14%. The tech-heavy Nasdaq fell 0.1%.

The US dollar weakened against other major currencies. The dollar index, which tracks the dollar’s strength against six major currencies, was down 0.35%.

Treasuries fell somewhat, too. The benchmark 10-year yield, which trades in opposite direction to prices, rose to just under 4.2%, near a one-month high. Bond yields’ move higher suggests the Trump administration’s action against the Fed could backfire, and rates may not start sinking as the president has demanded.

While moves were relatively small, it’s unusual for stocks, bonds and the dollar to fall in tandem. Meanwhile, Wall Street’s fear gauge, the VIX, jumped 6%, and safe havens like gold rallied.

“The ‘Sell America’ trade is back, but remains modest,” Karl Schamotta, chief market strategist at Corpay, said in a note.

Gold futures gained 3%, hitting a record high above $4,600 a troy ounce. Silver surged 8%, outpacing the gains in gold.

Fed independence is considered a cornerstone of what makes US financial markets exceptional. Investors, economists and historians all regard an independent central bank as key to stable financial markets, as policymakers can set monetary policy without regard to political interests.

The Trump administration embarked on an extraordinary affront to the Fed’s independence last year, lambasting Powell for not lowering interest rates as fast as the president would like.

Lower rates can lead to lower credit card rates and borrowing costs for consumers. But a central bank that lowers rates too quickly without regard to inflation can spook investors, who begin to worry that inflation could run rampant and thus demand a higher return for the risk of investing in American assets — pushing up yields, or borrowing costs, for the US government and consumers.

“A prolonged erosion of confidence in the Federal Reserve’s independence could weigh on the greenback, lift long-term yields and amplify global market volatility — outcomes at odds with the administration’s stated aims,” Schamotta at Corpay said.

Monday’s trades are a more muted echo of the “Sell America” trade from the spring of 2025, when fear of Trump’s trade policy sent investors pouring out of American assets. That sent bonds and the dollar tumbling and stocks an inch away from a bear market in April before recovering sharply through the end of 2025 after Trump backed off some of his harshest tariff threats.

“This is unambiguously risk off,” Krishna Guha, vice chairman at Evercore ISI, said in a Sunday note.

“We think the trade may well gather pace, and will in any event have legs, with Fed independence risks a key theme throughout ’26,” Guha said in a Monday note.

“But we are alive to the possibility the market may not deliver a full-blown riot,” Guha said. “Investors have learned to live with Trump bullying the Fed, Powell has only four months left as Fed chair, there is no immediate threat of removal and Powell has pledged to continue as before.”

The surge in precious metals like gold and silver amid renewed threats to the Fed’s independence is also reflective of what Wall Street has dubbed the “debasement trade:” Investors pile into hard assets like gold and silver — which are not beholden to the reputation of a government or institution — because of worries that currencies and bonds tied to a nation (in this case the United States) will increasingly lose value amid pressure on central banks, mounting debt burdens and concerns about credibility.

Markets had brief moments of panic in 2025 as President Donald Trump openly criticized Powell, calling him “too late” and questioning the Fed chief’s ability to run the central bank.

“Our view has been that markets are concerned about threats to Fed independence but had become accustomed to hostile jawboning and would not trade on this fear absent some clear coordinating proof point,” Guha said. “The subpoenas and Powell’s response could very well be such a coordinating proof point.”

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