President Trump's repeated criticism of Federal Reserve Chairman Jerome Powell, including suggestions of potential dismissal, triggered a sharp negative reaction in the financial markets.
On Monday, following comments from White House officials about considering Powell's dismissal, US stocks and the dollar plummeted, while long-term Treasury yields rose. This indicates a decline in investor confidence.
Trump reiterated his demand for pre-emptive interest rate cuts from Powell to prevent a potential economic slowdown. This further fueled the market's negative response.
The combined effect of the White House's consideration of firing Powell and Trump's pressure for rate cuts resulted in a significant decline across stocks, bonds, and the dollar, highlighting the market's sensitivity to political interference in monetary policy.
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