Some of Trump's allies are shocked by the subpoena of Powell, which may trigger risk aversion on Wall Street.

According to Mars Finance, on January 12th, sources indicated that some of Trump's allies were shocked by the Trump administration's decision to subpoena Powell, fearing that the legal battle against Federal Reserve Chairman Powell would disrupt the bond market. They also worried that this would make Powell reluctant to leave the Fed after his term ends in May. Powell can remain on the Fed's board of governors until 2028, and it has not yet been stated whether he intends to follow tradition and leave the Fed. It is understood that Trump's aides and allies are assessing the consequences of the action against Powell and its potential unintended effects. One concern is how Wall Street will react after Monday's opening – the bond market is likely to view this as a threat to the Fed's independence. This also adds uncertainty to Trump's efforts to replace Powell with a new leader. Evercore ISI analysts stated in a report that they were "shocked by this deeply disturbing development that threatens the central bank's independence. This is undoubtedly a risk-averse behavior. We expect the dollar, bonds, and stocks to fall in Monday's sell-off in US trading, similar to the situation during the peak of the tariff shock last April." (Jinshi)