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The Fire Jerome Powell Market Rout - WSJ

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Market Reaction to Trump's Criticism of Powell

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.

Market Plunge

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's Demands

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.

Overall Impact

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.

If the White House wanted a test of how firing Jerome Powell would go over in the markets, it succeeded on Monday. U.S. stocks and the dollar plunged while yields on long-term Treasurys climbed after President Trump renewed his attacks on the Federal Reserve Chairman.Monday was the first full trading day for markets to absorb National Economic Council director Kevin Hassett’s comments Friday that the White House is studying if Mr. Powell can legally be fired. On Monday Mr. Trump demanded again that Mr. Powell make “pre-emptive” interest rate cuts to avoid a slowdown. Cue the meltdown in stocks, bonds and the dollar, a trifecta of declining confidence.