The market is telling Trump to stop interfering with Federal Reserve independence

The unprecedented subpoena from the US Department of Justice to the Federal Reserve intensifies the conflict between President Trump and Fed Chair Powell over the pace of interest rate cuts. The investigation focuses on whether Powell misled Congress about the costs of a renovation project. Loss of Fed independence poses risks of uncontrolled inflation and stagflation, with gold benefiting and the US dollar declining. Stock markets may enter a bear phase due to growth concerns, while long-term interest rates could rise. This turmoil would also extend to the global economy, impacting other major economies' rates. Any attempt by Trump to remove Powell could lead to court battles, with market reactions likely to be significant if formal charges are made by the DOJ.