Wall Street took a turn for the worse over Easter as US president Donald Trump attacked US Fed chair Jerome Powell for not lowering interest rates.

Trump’s tirade against Powell was not just restricted to Easter, he previously called publicly on social media for Powell to be fired saying ‘Powell’s termination cannot come fast enough’.

The US president’s comments caused US markets to sell off with the Dow Jones Industrial Average Index and the S&P 500 index falling more than 2% on Easter Monday (21 April).

The US dollar was also a Trump casualty with the currency falling to a low of $1.3487 against the pound a level not seen since February 2022.

US treasuries didn’t fare any better with the 10-year yield jumping eight basis points higher at 4.4%.

The dollar and US treasuries have been under the cosh since Trump’s Liberation Day tariffs announcement on 2 April.

While, the 90-day pause in most reciprocal tariffs announced on 9 April was a source of market relief, rhetoric apparently threatening the independence of the Fed was always likely to be a cause for concern to the markets. It might even constrain the central bank’s ability to cut rates if it wants to avoid any appearance it has buckled in the face of political pressure. 

The gold price hit a new all-time high breaking the $3,500 per ounce as investors sought refuge in the alternative safe haven to the dollar and US treasuries. Currencies like the yen and Swiss franc have also been in heavy demand.

Subsequent comments from Trump that he had no intention of firing Powell and hints from treasury secretary Scott Bessent about a de-escalation of the tariff standoff with China helped US stocks reclaim some of their losses on 22 April.

Russ Mould, investment director at AJ Bell says: ‘Persistent comments from president Donald Trump, which put the independence of the US Federal Reserve in question, resulted in weakness in the dollar, US treasuries and Wall Street. 

‘US currency and government debt are often a safe haven during times of market turbulence but, with America the source of much of the recent volatility, investors have been reaching for another obvious port in the storm, gold, in large numbers.’ 

DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Tom Sieber) own shares in AJ Bell. 

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