Morning Bid: Powell pulls no punches

By Anna Szymanski

What matters in U.S. and global markets today

By Anna Szymanski, Editor-in-Chief, Reuters Open Interest

Markets got yet another weekend surprise from the Trump administration on Sunday, with news that the Justice Department is threatening to indict Federal Reserve Chair Jerome Powell over comments made about a building renovation project – something the Fed Chair called a “pretext” for the White House’s aim of gaining more influence over interest rate policy.

The initial market reaction has been muted – and President Donald Trump denied any knowledge of the actions – but Powell’s pointed response signals that in the escalating battle between the Fed chair and the president, the gloves have come off.

I’ll get into all the market-moving news below, but first check out the latest episode of the Morning Bid daily podcast. Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days a week.

Today’s Market Minute

* U.S. President Donald Trump’s administration has threatened to indict Federal Reserve Chair Jerome Powell over comments to Congress about a building renovation project, an action Powell called a “pretext” to gain more influence over interest rates Trump wants cut dramatically.

* U.S. President Donald Trump said the U.S. may meet Iranian officials amid a violent crackdown on protests in Iran, as he weighed a range of strong responses including military options.

* President Trump said on Sunday that he might block Exxon Mobil from investing in Venezuela after the oil major’s CEO called the country “uninvestable” during a White House meeting last week.

* Big Oil companies have injected a heavy dose of realism into U.S. President Donald Trump’s plan to rapidly invest billions in Venezuela, argues ROI Energy Columnist Ron Bousso.

* After two years of significant underperformance, the European automotive sector is finally showing signs of a turnaround. This much-hated sector could see brighter days ahead in 2026, argues Panmure Liberum investment strategist Joachim Klement.

Powell pulls no punches

Chair Powell revealed on Sunday that the Fed had received subpoenas last week related to remarks he made to Congress this past summer regarding cost overruns for a $2.5 billion building renovation project at the Fed’s headquarters in Washington.

His language was notable for its directness: “This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress’s oversight role … Those are pretexts. 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.”

What was also notable was the pushback from the president’s side of the aisle. Republican Senator Thom Tillis, a member of the powerful Senate Banking Committee that approves Fed nominees, said the threatened indictment calls into question the Department of Justice’s “independence and credibility”. Tillis also stated that he would oppose any Trump nominees to the Fed, including the coming choice of Powell’s successor, “until this legal matter is fully resolved.”

The immediate market impact was limited, with U.S. stock futures dipping slightly and the rates market pricing in only a slightly higher chance of near-term interest rate cuts.

The dollar took the brunt of any investor misgivings. The greenback fell by the most in three weeks on Monday against a basket of currencies. Investors shifted into safe havens, with gold hitting a record high above $4,600 per ounce and the safe haven Swiss franc strengthening against the dollar.

Asian equity markets weren’t bothered much. Chinese stocks rose to a new 10-year high on Monday, driven by artificial intelligence and commercial aerospace shares. Japan’s markets were closed today.

European shares dipped early on Monday, though this may have been driven less by the U.S. Justice Department’s threats to Powell and more by Trump’s call on Friday for a one-year cap on credit card interest rates at 10%. This move appeared to weigh on banks, with Barclays shares dropping to their lowest level in a month at one point on Monday.

The other major news of the weekend was the crackdown on the escalating protests in Iran against the clerical establishment. More than 500 people have been killed in the unrest and over 10,000 have been arrested, a rights group said on Sunday.

Oil prices were down slightly on Monday, after Iran said it had “total control” over the situation, which may have eased some investor concerns about supply disruptions from the OPEC producer.

Both Brent crude and WTI rose more than 3% last week – their biggest such rise since October. Trump is expected to meet senior advisers on Tuesday to discuss options for Iran, a U.S. official told Reuters.

Chart of the day

Information flows from Iran have been hampered by an internet blackout imposed by Tehran last Thursday after days of protests. Tehran has insisted the situation is “under total control” after it dialled up a violent crackdown on the demonstrations over the weekend.

The unrest in the country and the spectre of U.S. intervention has raised the stakes for energy markets, with Iran producing over 3 million barrels of oil per day. Additionally, one-fifth of global supply passes through the nearby Strait of Hormuz. Nevertheless, oil prices have so far had a muted response.

Today’s events to watch

* U.S. Conference Board Employment Trends Index (10:00 AM EDT)

* U.S. agricultural exports (11:00 AM EDT)

* Japan trade balance and current account (6:50 PM EDT)

* New York Federal Reserve President John Williams, Richmond Federal Reserve President Tom Barkin, and Atlanta Federal Reserve President Raphel Bostic all speak.

Want to receive the Morning Bid in your inbox every weekday morning? Sign up for the newsletter here. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X. 

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

(By Anna Szymanski)