Axios is reporting that Treasury Secretary Scott Bessent privately warned President Trump that the federal investigation into Fed Chair Jerome Powell had “made a multitude” and risked destabilizing monetary markets. Based on the report, Bessent didn’t problem the necessity for a full investigation, however he made clear that the timing and political optics had been harmful—particularly for markets that rely on the Federal Reserve’s independence and credibility.
Bessent’s concern, in line with Axios, was rooted in expectations round management transition. The idea had been that when President Trump named a brand new Fed chair, Powell would step apart in an orderly trend. As an alternative, the investigation modified that dynamic. Fairly than leaving quietly, Powell now seems extra prone to dig in, making a protracted and politically charged standoff that provides one more layer of uncertainty for traders. That shift, Bessent reportedly warned, “made a multitude” of what ought to have been a clear handoff.
On Sunday evening, President Trump denied having any information of a Justice Division investigation, telling reporters:
“I don’t know something about it, however he’s actually not excellent on the Fed, and he’s not excellent at constructing buildings.”
Powell, in response, struck a defiant however measured tone, saying:
“Nobody — actually not the chair of the Federal Reserve — is above the legislation, however this unprecedented motion ought to be seen within the broader context of the administration’s threats and ongoing stress.”
Markets initially reacted with warning. Shares dipped on the headline, as traders briefly priced within the threat that political stress on the Fed may undermine financial coverage independence and complicate rate-setting at a important time for the financial system. Nevertheless, that weak spot was shortly purchased.
By mid-session, the NASDAQ had rebounded sharply and was buying and selling close to report highs, up 122 factors, or 0.51%, at 23,791.85. The index reached a session excessive of 23,800.52, placing it inside putting distance of its all-time excessive at 23,958.47. Earlier within the day, the NASDAQ had fallen as little as 23,562.97, down 108 factors, exhibiting simply how shortly sentiment flipped as soon as dip patrons stepped in.
The S&P 500 additionally erased its early losses, climbing 16.50 factors, or 0.24%, to six,982.66. The index had traded as little as 6,934.07, down 32.21 factors at its worst ranges, earlier than recovering alongside the tech-led rally. The S&P is on tempo for a report shut at present.
The market’s message is obvious: whereas political threat across the Fed stays a priority, traders are nonetheless prepared to purchase weak spot so long as liquidity, earnings, and development developments stay intact. For now, shares are selecting to look previous the noise — but when pressure between the White Home and the Fed stays, the story is probably not over as traders fear concerning the political implications
