Fed chair Jerome Powell confirmed the “unprecedented” move late Sunday, which he blasted as part of US President Donald Trump’s pressure campaign for another rate cut.
Gold surged 1.6% to nearly US$4,600 an ounce, while silver approached US$85 an ounce – both records – as investors sought safe havens. The dollar fell about 0.2% against major peers, according to Bloomberg.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell said in a statement late Sunday.
Powell said the bank received grand jury subpoenas on Friday related to his Senate testimony in June, which had been about a major renovation project of Federal Reserve office buildings.
The Fed has indicated it would hold interest rates steady in its closely watched meeting at the end of this month.
“The subpoenas mark a clear break in the long-held boundary between politics and monetary policy, a line markets once assumed was untouchable,” Stephen Innes of SPI Asset Management told AFP.
“Investors are not weighing the odds of charges so much as the risk that political pressure has crept into the Fed’s decision-making,” Innes added.
Michael Brown of Pepperstone said the dollar and Treasuries were likely to face headwinds as the probe shakes confidence in US institutions and, “by extension, assets”.
“Both the USD and USTs will now have to price a considerably higher risk premium, and hence are likely to face some headwinds in the short term and unimaginably brutal selling pressure if this matter were to progress to criminal charges or a prosecution,” Brown added.
It came on the heels of Friday’s soft US jobs report showing just 50,000 new positions in December while unemployment slipped to 4.4%.
Asian markets were up, led by gains in Hong Kong, Shanghai, Seoul, Taipei and Manila, tracking Wall Street’s record close Friday.
Singapore, Kuala Lumpur, Jakarta and Sydney were also in the green, while Mumbai, Bangkok and Wellington dipped.
Most stock markets have enjoyed a solid start to 2026, with indices in Frankfurt, London, Paris and Seoul hitting record highs last week, largely on optimism for the tech sector and gains in defence sector shares.
Oil prices rose, building on their gains last week as protests in Iran continued to stoke geopolitical risk.
Trump has warned Tehran of repercussions if demonstrators were harmed, while Iran cautioned against foreign intervention.
On Sunday evening, Trump said he was considering potential military action against Iran following reports of a violent crackdown leading to the deaths of hundreds of people in the country.
“We’re looking at it very seriously,” he told reporters on Air Force One. “The military is looking at it, and we’re looking at some very strong options. We’ll make a determination,” he said.