Some Trump Allies Stunned by Subpoena of Powell, Sparking Wall Street Jitters

**Jan 12 – Sources familiar with the matter said Wednesday that some of former President Donald Trump’s allies were stunned by his administration’s decision to subpoena Federal Reserve Chair Jerome Powell.** The group worries legal action against Powell could disrupt the bond market, and fears he may be reluctant to step down once his chair term ends in May. Powell holds a seat on the Fed’s Board of Governors through 2028 and has not signaled whether he plans to follow the traditional post-term exit from the central bank. Trump aides and allies are currently weighing the fallout from targeting Powell, including potential unintended consequences. Key concerns: how Wall Street will respond when markets open Monday—with the bond market likely interpreting the move as a threat to Fed independence—and uncertainty over Trump’s push to replace Powell with a new chair. Evercore ISI analysts noted in a report: “We are stunned by this deeply troubling development, which endangers the central bank’s independence. This is clearly a flight-to-safety event. We anticipate the U.S. dollar, bonds, and equities will all decline in U.S. trading Monday—similar to the height of tariff-related volatility in April 2023.” (Source: Jin10)