The criminal investigation into Federal Reserve Chair Jerome Powell is causing global investors to reconsider U.S. assets. Futures on the S&P 500, Dow Jones, and Nasdaq all dropped after the Department of Justice opened an investigation into the Fed’s headquarters renovation. Powell defended the Fed’s independence in a video statement.

The probe is seen as a surprising move, especially with Powell’s chairmanship ending in May. Analysts believe Trump may be trying to intimidate Powell, impacting central bank independence and U.S. asset diversification. The situation could lead to increased pressure on the long end of the yield curve and risk appetite in 2026.

President Trump’s actions are viewed as counterproductive, fueling upward pressure on rates and affecting investor allocation strategies. Investors may shift towards China and certain European markets for opportunities. The dispute highlights the risk to Powell’s successor’s credibility and the ongoing tension between Trump and the Fed.

The Trump administration’s attack on the Fed raises concerns about the central bank’s independence and the potential impact on future Fed chairs. The pace of the administration’s actions and the credibility gap between investors and the Fed could lead to further challenges in monetary policy decision-making.

Read more at CNBC: Trump’s ‘intimidation’ of Jerome Powell with DOJ probe tests Fed