Donald Trump's 'intimidation' of Powell tests Fed credibility, risking investor exit from U.S. assets

Trump's intimidation of Powell raises concerns about the Federal Reserve's credibility and independence from the White House. This situation could lead to a reassessment by investors regarding U.S. assets. The pressure on Powell reignites fears that the central bank's policy may be swayed by political motives, which may drive investors to seek exits from U.S. stocks or bonds. This development is crucial for the financial markets, especially as uncertainties in the economy increase. As market sentiment grows increasingly negative, there may be shifts in liquidity across various asset classes, with a flight to safety becoming more pronounced. Overall, this growing doubt around the Fed's autonomy could affect confidence in U.S. assets in the short and medium term.