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The White House has escalated its conflict with the Federal Reserve through a Department of Justice subpoena of Fed Chair Jerome Powell and attempts to fire a Fed governor, raising investor concerns that political interference could undermine the Fed’s independence.

What caught our eyes this week

Fed pressure hits a fever pitch

A new front has opened in the battle between the White House and the Federal Reserve (Fed). Fed Chair Jerome Powell announced over the weekend that he had been subpoenaed by the U.S. Department of Justice in a criminal investigation over testimony to the Senate Banking Committee in June about ongoing renovations to Fed buildings. Powell made a rare but forceful public statement, rebuking the action and drawing a direct line to the president’s frustration at the Fed’s cautious approach to easing monetary policy. At the same time, the legality of President Trump’s attempt to fire Fed Governor Lisa Cook remains with the Supreme Court, and Trump’s nominee for Fed Chair could come any day. If investors get a sense that the Fed (in whatever form it ends up taking) now operates at the behest of the White House, we could see that reflected in markets through higher inflation expectations and long-term Treasury yields, a lower U.S. dollar, and a renewed bid for “debasement trades” like gold and bitcoin.

Market release valves for a compromised Federal Reserve

CHART OF THE WEEK: Cerity Partners, FactSet, 1/12/2026.

Past performance does not guarantee future results.

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