The 'sell America' trade is crushing markets as Trump butts heads with the Fed
April 21, 2025
The "sell America" trade was in full swing as investors kicked off the week on Monday.
Stocks and bonds tanked, while the US dollar set a fresh three-year low. The moves came after President Trump further escalated his feud with Fed Chair Jerome Powell, saying on
saying on Truth Social
that the central bank head is a "major loser" who has taken too long to cut interest rates.
These comments shouldn't be confused with Trump saying on social media last week that Powell's "
termination cannot come fast enough
," again in reference to a lack of rate-cut activity. Both are new entries in the pair's
long-running feud
.
"A lot of this could just be trying to set the storyline for later on, that if we do go into a recession, it was because the Fed didn't cut rates," Bespoke co-founder Paul Hickey told Business Insider, adding that it "sets the Fed up for being scapegoated down the line."
Regardless of the motivation, the comments prompted traders to "sell America" in markets on Monday. Here are the three major assets impacted:
Stocks
Bonds
Currencies
US dollar
:
Down more than 5% versus the euro and yen
Dollar Index
:
Down 0.9%, paring losses of as much as 1.3%
On Friday, Kevin Hassett, the director of the National Economic Council, said that Trump will
"study"
ways to remove the Fed chair. The president has
long lambasted Powell
for not lowering interest rates. Trump's
frustration has gained steam
since Powell's latest speech, in which he suggested that the president's tariffs could create policy issues for the central bank.
"I think the Fed's hands are tied, and he doesn't like it," Jamie Cox, Harris Financial Group financial advisor, told BI
White House interference in Fed leadership isn't seen sitting well with investors, and attempts to politicize monetary policy decisions would likely introduce further uncertainty into markets.
"Not only is the independence of the Fed clearly under threat, but the prospect of de-dollarization and a move away from US hegemony is an increasingly realistic one," said Michael Brown, a senior research strategist at Pepperstone.
Here's more detailed context behind the moves across asset classes:
Stocks
Major stock indexes have swung violently over the past few weeks in reaction to
Trump's sweeping tariffs
unveiled in early April. Though most of the trade duties were later paused, tariffs on China have soared even higher, and the resulting trade war has been a challenge for investors to digest.
No new trade deals were announced over the weekend to uplift that market's spirits; instead, China
warned
that it would take countermeasures against any nation that reaches a deal with the US to isolate the country from global trade.
The sell-off was led by dominant tech mega-caps, with
Tesla
and
Nvidia
shedding 7% and 6%, respectively. The former is getting battered as analysts
brace for pain
ahead of Tuesday, when the electric vehicle maker will release first-quarter earnings.
Bonds
Bond prices, which move in the opposite direction to yields, have dropped in recent weeks amid threats to US growth and deep uncertainty around trade. Commentators have observed that instability in the US economic outlook has hurt Treasurys' ultrasafe reputation.
It's a dynamic that's played out several times already this year, with tariff uncertainty and policy headwinds
sending yields surging
.
Bond vigilantes
may have forced Trump to hit pause on the trade war earlier in the month, but headwinds for US Treasurys also include foreign investors selling and volatility in the so-called basis trade orchestrated by hedge funds.
Trump's attacks against Powell will likely only heighten investors' nervousness, keeping yields elevated.
Dollar
The greenback has continued to plunge, sending the
US Dollar Index
deeper to a three-year low.
"President Trump's renewed criticism of Fed Chair Powell … is a reminder that trade policy is not the only channel through which the administration's unconventional approach could undermine the dollar and US asset markets," Capital Economics wrote.
The dollar's move lower goes against earlier expectations, as it was implied that tariffs would support currency levels.
Overall, the retreat from US safe-havens, coupled with a broader risk-off mood, sent
gold
surging to a new record high on Monday. Crypto also gained, with
bitcoin
touching $88,000 for the first time since March.
