U.S. financial markets faced sharp volatility this week as news broke that Federal Reserve Chair Jerome Powell is under criminal investigation. While details remain scarce, the probe has already sent shockwaves through Wall Street, with the S&P 500 dropping 2.8% on Thursday – its worst single-day decline since early 2023.
🔍 What we know: The investigation reportedly relates to potential misconduct during pandemic-era monetary policy decisions. Xu Deshun, a researcher at the Chinese Academy of International Trade and Economic Cooperation, notes: "This development complicates an already fragile economic landscape. Global investors are watching closely."
📈 Market impact: Treasury yields swung wildly as traders scrambled to reassess rate cut timelines. Bitcoin briefly surged 9% before paring gains, reflecting classic 'risk-off' behavior among younger investors.
🌏 Global ripple effects: Asian markets opened mixed Friday morning, with Japan's Nikkei falling 1.2% while Shanghai stocks showed resilience. Analysts warn of potential impacts on:
Global inflation forecasts
Cross-border investment flows
Central bank coordination efforts
This crisis comes as the Fed navigates its toughest policy challenge since the 2008 financial crisis. With Powell's leadership now in question, markets face unprecedented uncertainty during what was already predicted to be a turbulent election year.
