The New York Times report breaking news of the investigation and Powell’s subsequent disclosure rattled markets, reviving fears that years of President Donald Trump pressuring the Federal Reserve could now be realized into a direct assault on its independence.

Futures tied to the Nasdaq 100 led the decline, falling about 0.8%, as interest-rate-sensitive technology stocks bore the brunt of the selloff. S&P 500 futures were down roughly 0.5%, while Dow Jones Industrial Average futures fell about 0.4%, according to late-evening pricing.

Investors sought protection in the traditional safe-haven assets. Gold futures rose 1.7% to around $4,578 an ounce, while silver jumped more than 4%, reflecting renewed demand for protection against political and monetary instability. The U.S. dollar weakened modestly against several major currencies, including the Swiss franc and Japanese yen.

After years of largely staying silent while Trump repeatedly mocked and threatened him, Powell appeared to have reached a breaking point, issuing a rare and pointed statement. 

He wrote that while “No one—certainly not the chair of the Federal Reserve—is above the law,” the attack should be seen in the “the broader context of the administration’s threats and ongoing pressure.” 

“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings…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.”

Economists warn that if the executive branch successfully co-opts the Fed, it could create a “self-fulfilling prophecy” of higher long-term inflation.

As Oxford Economics recently noted, any “cracks in the Fed’s independence” could spread rapidly through markets and ultimately raise borrowing costs for the businesses the administration seeks to protect with low interest rates. 

In a note published last July, when Trump publicly threatened to fire Powell, Deutsche Bank warned that such a move could spark severe market disruption.

“Both the currency and the bond market can collapse,” the bank wrote, citing heightened risks of inflation and financial instability. “The empirical and academic evidence on the impact of a loss of central-bank independence is fairly clear.”

Wall Street executives have echoed those concerns. Brian Moynihan, chief executive of Bank of America, said recently the erosion of Fed independence would carry serious consequences.

“The market will punish people if we don’t have an independent Fed,” Moynihan said.

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U.S. oil prices rose 0.56% to $59.45 a barrel, and Brent crude climbed 0.52% to $63.67 a barrel, as reports said President Donald Trump is weighing military options in Iran to follow through on his threats to attack if the government kills protestors.

Iran, which pumps 3 million-4 million barrels per day, has seen protests spread nationwide amid an economic crisis. Human rights groups estimate hundreds have died from the government’s crackdown, as the regime’s piecemeal attempts to appease Iranians have failed.

The government cut off internet access in the country last week, slowing the flow of information on the latest developments. But various reports and expert assessments indicate the unrest is posing a major threat to Tehran’s authority.

In particular, the security apparatus that keeps the leadership in power is showing cracks, according to the Institute for the Study of War (ISW).

“There are further indications that the ongoing protests are challenging the ability and willingness of Iranian security forces to crack down on the protests,” the think tank said in a recent report. “The IRGC Intelligence Organization released a statement on January 10 that it is ‘dealing with possible acts of abandonment.’ This statement suggests that some Iranian security forces may have already defected or that the regime is very concerned about this possibility.”

It cited additional reporting that pointed to some officers anticipating the regime’s collapse, forces in one city refusing to fire on protesters, and the possibility the government will deploy the regular army.

These rank-and-file troops, known as the Artesh, are less ideological and more representative of the Iranian population than the Islamic Revolutionary Guard Corps, ISW said. That raises the risk Artesh troops, who aren’t trained to handle civil unrest, could defect and indicates internal security forces are stretched thin, it added.

A separate analysis from ISW noted that the government is treating the protests as a military issue instead of a law enforcement one. It also said Tehran “has taken the rare step of using the IRGC Ground Forces to suppress protests because it has likely determined that these protests represent a dire security threat to the regime.”

Energy markets are digesting the implications of political upheaval in Iran, a top OPEC member with the world’s third largest proven oil reserves. In fact, anti-government protests have already spread to Iran’s oil sector with workers at a large refining and petrochemical complex going on strike.

Market tracker Kpler said in post on X on Saturday that Iran’s regime faces a tipping point and is under unprecedented strain.

“Though a full collapse remains a low-probability event, the rising risk is already lifting the geopolitical premium in oil markets. Any disruption—through factional conflict, export curbs or external intervention—could prompt near-term price spikes, despite global surpluses,” it added.

“Over the medium term, regime change could unlock sanctions relief and reshape trade flows, with European, Indian and Japanese refiners poised to benefit, while Chinese independents and Middle Eastern producers face stiffer competition.”