Markets unravel as confidence in U.S. policy hits a new low, driving flight to safe-haven assets and fears of a looming equity shock.
The U.S. dollar has dropped to a three-year low and gold has soared past $3,500 an ounce for the first time ever, as former President Donald Trump intensified his public assault on Federal Reserve Chair Jerome Powell—spooking global markets and accelerating a dramatic shift out of American assets.
In a tirade that lit up social media and rattled trading floors from Tokyo to Frankfurt, Trump dubbed Powell “Mr. Too Late” and “a major loser,” reigniting calls for deep interest rate cuts ahead of the November election. He even floated the idea—again—that Powell’s days as Fed chair are numbered.
A Market on Edge
The fallout was immediate. The U.S. dollar index, which tracks the greenback against a basket of major currencies, slid to levels not seen since early 2022. The yen broke through ¥140, while the pound surged into its longest winning streak against the dollar since 1971.
Meanwhile, gold—which typically spikes during times of geopolitical or economic uncertainty—rocketed past $3,500, setting a new all-time high. Equity markets, already reeling from mounting tariff tensions, nosedived. The Dow lost nearly 1,000 points on Monday alone, marking its worst April since 1932.
And it’s not just equities. Argentex shares were suspended after dollar-driven volatility triggered margin calls, while U.S. bond prices—another typical safe haven—also declined, signaling deeper unease.
“Exorbitant Privilege” Under Threat
What’s spooking investors isn’t just Trump’s fiery rhetoric—it’s what it suggests about the integrity of U.S. policymaking.
“This is less about the Fed and more about credibility,” said Jim Reid, a strategist at Deutsche Bank. “Investors are waking up to the risk that U.S. institutions are becoming politicized to the point that even the dollar’s ‘exorbitant privilege’ may start to erode.”
That privilege—the ability to borrow globally in your own currency and run persistent twin deficits without penalty—has underpinned U.S. dominance for decades. But with fiscal deficits ballooning, trade tensions escalating, and the White House openly attacking the central bank, cracks are starting to show.
Here’s a look at how key assets have moved since Trump’s “Liberation Day” tariff push earlier this month:
| Asset | Performance Since April 2 |
|---|---|
| Gold | +17% |
| German Bunds (10yr) | +9% |
| Pound Sterling | +6% |
| U.S. Tech Stocks (Nasdaq) | -12% |
| Crude Oil (WTI) | -10% |
| U.S. Dollar Index (DXY) | -8% |
IMF, Wall Street, and the World React
Central bankers and finance ministers gathering this week in Washington for the IMF-World Bank Spring Meetings now have fresh volatility to contend with.
UK Chancellor Rachel Reeves is expected to deliver a speech defending free trade and multilateralism amid escalating U.S. protectionism. Meanwhile, the IMF is set to publish its World Economic Outlook and Global Financial Stability Report, both of which are likely to reflect rising risks to global growth from U.S. policy instability.
Market analysts warn of a possible historic crash in U.S. equities if Trump continues to undermine confidence in the Fed.
“There’s no playbook for this,” said Tony Sycamore at IG Markets. “If investors start to believe the U.S. is no longer a safe steward of its own currency or economy, that’s a bigger problem than interest rates.”
Powell Stays Silent—for Now
So far, Jerome Powell has refused to respond publicly. But in past remarks, he’s pushed back against Trump’s trade strategy, warning that sweeping tariffs could stoke inflation and weigh on GDP growth—ironically the very concerns monetary policy is designed to mitigate.
Even as Trump rails against Powell, the Fed is caught in a bind: Cutting rates could look like capitulation to political pressure, while staying put could deepen the rift between the central bank and the White House.
A Fed source speaking on background noted that “Powell is focused on the data, not the drama,” hinting at a wait-and-see approach heading into May’s FOMC meeting.
Looking Ahead
If Trump keeps up the pressure—and markets keep wobbling—the consequences could reach far beyond the dollar and Dow.
Already, Southeast Asia is reeling from U.S. tariffs of up to 3,521% on solar imports, while Europe braces for retaliatory moves. German industry groups warned of significant blowback if transatlantic supply chains are disrupted further.
And with the election season heating up, Wall Street is bracing for more volatility—not less. Gold might be shining right now. But underneath, confidence in America’s economic leadership is looking dangerously brittle.
