A criminal-investigation threat against the U.S. Fed chair revived fears of political meddling, pushing investors toward havens as oil markets weighed fresh Middle East risk.
Global markets started the week on edge after Federal Reserve Chair Jerome Powell said the Justice Department had issued subpoenas tied to his congressional testimony on the Fed’s headquarters renovation and that he had been threatened with a potential criminal indictment—an escalation that investors read as a direct challenge to the central bank’s independence.
The immediate market message was classic “risk-off,” but with an unusually political catalyst. Gold vaulted to a record high as investors sought protection against the twin risks of policy uncertainty and a weaker dollar, while equity futures softened and government-bond yields rose, reflecting a tug-of-war between safe-haven demand and worries about longer-run inflation credibility. For retail investors, the move showed up quickly in vehicles like SPDR Gold Shares (GLD), which tends to track bullion’s swings during periods of institutional stress.
The reverberations were global. European stocks slipped, and bank shares took a sharper hit after a separate U.S. policy headline—President Trump’s proposal to cap credit card interest rates for a year—prompted investors to reassess earnings power and regulatory risk across lenders with large consumer franchises. Barclays (BARC.L) fell notably, underscoring how quickly Washington policy can spill into overseas financials when the U.S. becomes the dominant source of volatility.
Commodities added another layer of uncertainty. Oil edged higher as traders monitored unrest in Iran and the risk—however difficult to quantify—of disruptions that could threaten flows through the Strait of Hormuz. Yet the crude market’s reaction remained contained as participants also looked to potential additional supply from Venezuela, keeping the broader 2026 “oversupply” narrative intact for now. Energy majors such as ExxonMobil (XOM) remained in focus as investors tried to gauge how quickly Venezuelan barrels could realistically return and what new political strings might come attached.
Taken together, the day’s price action carried a clear signal: when investors question the reliability of core U.S. institutions—and simultaneously face renewed geopolitical supply risk—portfolio flows can shift abruptly toward liquidity and hard assets, even without a decisive change in growth data.
