Financial markets were rattled on Monday after Federal Reserve Chairman Jay Powell revealed that the central bank had received grand jury subpoenas and was facing the threat of criminal indictment by the Justice Department. The disclosure sent shockwaves through global trading floors, raising alarms about political interference in US monetary policy and triggering a swift selloff across American assets.
Powell sought to frame the investigation as retaliation for the Fed’s policy independence, saying the threat of criminal charges stemmed from the central bank’s refusal to set interest rates according to presidential preferences. He dismissed allegations tied to a $2.5 billion renovation of the Federal Reserve’s headquarters, which has reportedly been cited as a pretext for the probe, and warned that undermining the Fed’s autonomy would carry serious consequences for market stability.
Markets reacted immediately to the uncertainty. US equities slid in early trading, with the Dow Jones Industrial Average dropping nearly 290 points, while the S&P 500 and Nasdaq also moved lower. At the same time, investors fled toward traditional safe havens, pushing gold and silver sharply higher after an already strong start to 2025. The US dollar weakened against a basket of major currencies, signaling growing unease about the country’s financial and institutional outlook.
Bond markets echoed those concerns. Yields on 10-year and 30-year US Treasuries rose, reflecting traders’ assessment that holding American government debt had suddenly become riskier. Financial media described the mood as a shift into “Sell America mode,” capturing the breadth of the retreat from US-linked assets.
Analysts and former policymakers were quick to warn of deeper repercussions. Invesco’s David Chao said the subpoena reinforced perceptions that US assets were becoming less attractive, arguing that the country was not only retreating behind what he described as “Fortress America” borders but also growing more predatory in its economic posture. Former Federal Reserve Chair Janet Yellen issued a stark warning, calling the probe into Powell “extremely chilling” for markets and cautioning that pressuring the Fed to cut rates for political reasons was a hallmark of unstable, developing economies rather than mature democracies.
The political tension comes against a backdrop of mounting fiscal strain. A recent Congressional Budget Office report showed that the US government paid $276 billion in interest on its debt in the final three months of 2025 alone, an increase of $31 billion compared with the same period a year earlier. Servicing costs are rising rapidly as higher interest rates collide with an expanding debt load.
With total national debt now standing at roughly $38.5 trillion and growing by an estimated $1 trillion every 100 days, critics warn that confidence in the dollar and US financial leadership is increasingly fragile. The confrontation between the White House, the Justice Department, and the Federal Reserve has amplified fears that institutional stability itself may be at risk, turning what began as a legal probe into a broader test of the credibility underpinning the global role of US markets and the dollar.
