The market was already juggling how much the Federal Reserve would choose to cut interest rates this year, but now it’s weighing the wrong kind of cuts — at the top of the world’s most powerful central bank. Clouded by trade war controversy and a global market meltdown, investors are only now processing one of the biggest threats to US hegemony.

• In recent weeks, President Trump has reportedly discussed firing Fed Chair Jerome Powell, escalating his attacks in recent weeks as the bank holds interest rates steady.
• One of the roadblocks to removing Powell, a Supreme Court case soon to be decided, could put an end to the generation-long independence of the Fed.

What’s the impact? Policy uncertainty was already at highs not seen since COVID, stirring concerns about stagflation and recession-level concerns, but the Fed’s involvement has only created more chaos. On Monday, the S&P 500 fell nearly 3%, while gold hit a new all-time high of $3,400/oz, and the 30-year Treasury briefly rose above 5%. And as Americans juggle risks, the US Dollar is facing an exodus due to the threats to the Fed — falling to three-year lows and pushing more Americans to stock up on cash and risk assets, or even open overseas bank accounts as a hedge.