Fears of the end of the U.S. exceptionalism trade have triggered a rare, simultaneous selloff across stocks, Treasuries and the dollar in recent weeks, as concerns over tariffs and the politicization of the Federal Reserve under President Donald Trump continue to mount.
Since Trump’s self-declared “Liberation Day” on April 2, when he unveiled sweeping “reciprocal tariffs” on U.S. trading partners, the market reaction has been swift and broadly negative. U.S. government bonds, traditionally a refuge during equity volatility, have failed to provide a safe haven.
The Trump-Powell Tension Behind The Market Unwind
Market fragility was further exposed by Trump’s open attacks on Fed Chair Jerome Powell.
First, he wrote last week on Truth Social, “Jerome Powell is always too late and wrong. His termination cannot come fast enough.”
Then, during a press conference with Italy’s Giorgia Meloni, he pushed the issue further: “If I want him out. He’ll be out of there real fast. Believe me.”
Confirmation from National Economic Council Director Kevin Hassett that the administration is “considering” removing Powell before his term ends in 2026, also added fuel to the fire.
On Monday, the Trump-Powell drama escalated again, sending shockwaves across currency markets, where central bank independence is viewed as a cornerstone of stability.
Trump posted on Truth Social, pushing for “preemptive” interest rate cuts. He wrote that with energy costs and food prices falling — sarcastically referencing Biden’s “egg disaster” — inflation was virtually gone. The president warned of a slowing economy unless Powell, whom he labeled a “major loser,” acted immediately.
He further accused Powell of political bias during the previous election cycle, claiming the Fed Chair only cut rates to help …