U.S. equities and the dollar slipped on Monday after Jerome Powell disclosed a federal criminal probe into the $2.5 billion renovation of the Federal Reserve headquarters and his testimony on the project. Powell framed the investigation as a pretext aimed at forcing the central bank to bend monetary policy to Donald Trump’s political wishes, warning that future rate decisions could be dictated by pressure rather than data. The remark sparked a rapid sell‑off: the S&P 500 fell about 0.7 %, the dollar index dropped 0.3 %, while the 10‑year Treasury yield jumped 0.7 %.

Analysts at Evercore ISI and Wolfe Research described the episode as a “risk‑off” trigger that revives the historic “sell America” trade seen during the 2023 tariff shock. The timing is uneasy, arriving just before the January FOMC meeting and ahead of President Trump’s expected nomination of Powell’s successor. Market participants now question whether political intimidation could erode confidence in U.S. monetary independence, a concern that could keep risk premiums elevated for months.