Criminal Probe Against Fed Chairman Powell Depresses Dollar and U.S. Stock Futures
January 12, 2026
(157) This Monday ought to have been a quiet day in financial markets due to a paucity of data releases and Japan’s Coming of Age holiday closure. Instead, the dollar has declined 0.4% against the euro, sterling, Swiss franc, Mexican peso, and on a weighted basis as measured by the DXY index. Major U.S. stock indices are down 0.5-0.9% in futures trading in contrast to overnight stock market gains of 0.9% in Taiwan 0.8% in South Korea, 1.4% in Hong Kong and 0.3% so far in Germany. Gold and Silver prices have shot up 2.3% and 1.9%, whereas Bitcoin’s price is 0.5% lower.
Today’s drama stems from a reported criminal probe by the U.S. Justice Department against Fed Chairman Powell in connection with his testimony last June before the Senate Banking Committee regarding cost overruns in the renovation the central bank’s building headquarters in Washington D.C.. Behind that probe is highly public effort of President Trump to prod Fed officials into lowering their interest rate much faster and much further than they have been doing. Throughout history, political interference in monetary policy has frequently led to inflationary consequences, and that pattern has investors deeply worried.
One irony is that market-determined long-term interest rates have enormous influence on economic conditions, and they tend to rise, not fall, when politicians are perceived to be manipulating short-term rates. The 10-year Treasury yield rose three basis points overnight in contrast to declines of two basis points in yields on German bunds and French OATs.
Among released data this Monday,
- Swiss consumer sentiment rose to an 11-month high in December with a reading of -31 versus -34 in November and a 2025 low point of -45 last April.
- Indian consumer price inflation accelerated to 1.3% last month from 0.7% in November and a record low of 0.25% in October.
- Danish CPI inflation slowed to a 7-month low in December of 1.9%. Between October 2022 and October 2023, such had plunged from 10.1% to 0.1%.
- Armenian CPI inflation rose to a 2-month high of 3.3% in December from 3.1% in the prior month but remained below last year’s high of 4.8% in May.
- A 6.8% CPI inflation rate in Moldova in December constitutes a 13-month low.
- Lithuanian producer prices dropped 1.8% on month and 3.0% on year (an 8-month low) in December.
- The Sentix gauge of investor confidence toward Euroland’s economy improved to a half-year high this month, printing at -1.8 after a minus 6.2 score in the previous month.
Copyright 2026, Larry Greenberg. All rights reserved.
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