The U.S. "Triple Threat" from Stocks, Bonds, and Currency May Stem from Concerns Over the Fed's Independence

The U.S. stock market plunged as President Trump continued to criticize Powell, calling for the Federal Reserve chairman to cut interest rates. Increasing signs indicate that Trump's trade war is pushing the U.S. economy toward a recession. The dollar fell alongside long-term U.S. Treasury bonds. On his social media site, Trump expressed support for a "proactive rate cut" and brashly labeled the Fed chairman a "loser." Since last week, Trump's repeated "attacks" on Powell have raised a question: Can the Federal Reserve maintain its independence without political influence? This is crucial for confidence in the U.S. financial markets. Joe Saluzzi, co-head of the institutional trading desk, stated, "The market does not want the Fed's independence challenged. The market can at least attempt to predict what an independent Fed will do. If the Fed's independence is undermined, it might lead to more unstable (unpredictable) decisions. The market dislikes unpredictability."