Fed Chairman Jerome Powell under criminal investigation

Benchmark 10-year Treasury yields rose on Monday as investor concerns over the independence of the U.S. Federal Reserve fueled stock markets and volatility following a 10-year bond auction.

The yield on the 10-year U.S. Treasury rose more than 1 basis point to 4.187%. The yield on the 30-year Treasury note rose more than 1 basis point to 4.836%.

One basis point equals 0.01%, and yields and prices move in opposite directions.

On Sunday night, Fed Chairman Jerome Powell announced that the Justice Department is conducting a criminal investigation against him, focusing on the $2.5 billion renovation of the central bank’s headquarters in Washington, D.C.

But in a video statement tweeted by the Fed’s X account, Powell said the investigation was prompted by President Donald Trump’s frustration with the Fed’s refusal to cut interest rates at his request.

“The threat of criminal charges is the result of the Federal Reserve setting interest rates based on its best assessment of what will serve the public, rather than following the wishes of the president,” Powell said in a video.

Bond investors are concerned that the Fed could become less cautious about inflation in the future if Trump takes over.

The Fed has cut interest rates three times in 2025, but it is likely that further rate cuts will be postponed at the policymakers’ meeting at the end of January.

“This is a question about whether the Fed can continue to set interest rates based on evidence and economic conditions, or whether monetary policy will be dictated by political pressure and intimidation,” Powell added.

Investor appetite for government debt appears to be healthy, with BMO noting Monday’s 10-year bond auction was “robust.” The auction caused bond prices to rise and yields to fall.

Investors are keeping an eye on Tuesday’s Consumer Price Index and Wednesday’s Producer Price Index, which will provide important insight into the health of the U.S. economy.