Trump Backs Powell Probe Amid Fed Nomination Standoff

Henry Thompson

Remarks of Officials

Economic

Political

Central Bank

Summary:

President Trump endorses a criminal probe into Fed Chair Powell, risking a nominee stalemate and raising concerns for central bank autonomy.

President Donald Trump on Monday voiced his support for an ongoing criminal investigation into Federal Reserve Chairman Jerome Powell, dismissing a Republican senator's threat to block his replacement nominee if the probe continues.

Speaking to reporters in the Oval Office, Trump said U.S. Attorney for Washington Jeanine Pirro, who is spearheading the unprecedented investigation, should "take it to the end and see."

The president's comments came in response to a question about whether Pirro should drop the case after Senator Thom Tillis (R-N.C.) declared he would oppose any new Fed nominee until the Powell investigation is resolved.

High-Stakes Confirmation Battle Looms

Tillis issued his ultimatum on Friday, the same day Trump announced Kevin Warsh as his choice to succeed Powell as Fed chair following a months-long selection process.

As a member of the Senate Banking, Housing, and Urban Affairs Committee, Tillis holds a key vote. The committee consists of 13 Republicans and 11 Democrats. If Tillis votes with all Democrats against Warsh, he could trigger a stalemate, preventing the nomination from reaching a full Senate vote.

A Probe Rooted in Policy Disagreements

Powell first disclosed on January 11 that he was under criminal investigation. The announcement followed months of public criticism from Trump and his allies, who have consistently attacked Powell for not lowering interest rates as aggressively as the president demanded.

Powell has framed the investigation as an administrative threat intended to undermine the central bank's independence. He stated that the Fed's rate-setting decisions were "based on our best assessment of what will serve the public, rather than following the preferences of the President."

The conflict has also focused on the Fed's Washington headquarters renovation. Trump has repeatedly suggested the multi-year, multi-billion-dollar project involves either corruption or mismanagement by Powell. "It's either gross incompetence or it's theft of some kind, kickbacks. I don't know what it is," Trump said Monday. "But Jeanine Pirro is incredible, and she'll figure it out."

The Federal Reserve has defended the renovation, stating it will lower long-term costs for the central bank and has sought to explain any cost increases. According to a CNBC report, the Fed had not yet complied with grand jury subpoenas issued as part of Pirro's probe.

Powell's term as Fed chair is set to end in May.

To stay updated on all economic events of today, please check out our Economic calendar

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Manuel

Commodity

Copper clawed back some losses after a heavy sell-off in Asian trading hours amid signs that buyers in China who’ve been put off by high prices are dipping back into the market.

Contracts were down about 2% on the London Metal Exchange after earlier dropping as much as 5.7% to $12,414.50 a ton. Other base metals also posted big losses, with tin falling as much as 11% and nickel dropping 8.1%.

Copper surged to records along with other metals last month as bullish Chinese investors piled into commodities amid doubts about the dollar and a shift away from currencies and sovereign bonds. But manufacturers in the country cut back purchases sharply during the rally, and when they will step back in and buy is now a key question for investors.

Prices on the Shanghai Futures Exchange rose back above 100,000 yuan a ton as the night-trading session got underway at 9 p.m. local time on Monday, after closing down by the daily limit.

“The near-term correction will provide a good window to buy,” Li Yaoyao, an analyst at Xinhu Futures Co., wrote in a note.

Copper is entering a “supercycle” of sustained high prices and could trade between 100,000 yuan ($14,385) and 150,000 yuan a ton this year in Shanghai, according to Li. Copper Pares Losses as Signs of Dip-Buying Emerge in China_1

Copper Pares Losses as Signs of Dip-Buying Emerge in China_1

Monday’s volatile trading came on the heels of a heady year for copper, with futures surging more than 40% in 2025 following mine disruptions, speculation about demand from the energy transition, and the possibility of US import tariffs.

The latest outsized moves surprised seasoned observers, with some traders exiting the market, citing heightened risks and a disconnect with softening physical markets. But inside China, talk of dip-buying still filled chat groups and social media over the weekend and analysts are not ruling out another swing higher.

“Some funds are exiting ahead of the Lunar New Year to avoid risk amid such high volatility,” said Gao Yin, an analyst at Shuohe Asset Management Co., referring to the annual holiday that starts later this month. “But the medium- to long-term logic behind this round of rally remains intact. There is a unanimous, bullish consensus among Chinese investors.”

January was the busiest month ever for metals trading on the Shanghai bourse, and copper volume surged on Friday to a record amid the sharp selloff. Copper is viewed as an attractive bet because of a strong demand outlook and tight supplies, but last week’s spike came as manufacturing activity in China stalled.

That contrast — between soft on-the-ground consumption and huge investor activity — was underscored by the unexpected deterioration in China’s factory activity in December, according to data on Saturday. Copper bulls have based optimism more on other macro factors, including looser global monetary policies, a softer dollar and a surge in fiscal spending in developed economies.

Copper fell 2% to settle at $12,891.50 a ton on the LME, after ending 3.4% lower on Friday. Aluminum lost 2.8%, while tin was down 10%.

Source: Bloomberg

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Manuel

Forex

Commodity

The dollar gained, rounding out its biggest two-day rally since April, as precious metals extended their slump and as US manufacturing data came in unexpectedly strong.

The world’s primary reserve currency rose against all of its major peers Monday, and a Bloomberg dollar gauge appreciated about 1.2% over the past two sessions. That’s the most since the aftermath of President Donald Trump’s rollout of sweeping tariffs 10 months ago roiled markets.

Gold and silver both sank Monday, adding to a slide that began last last week after Trump said he’d nominate Kevin Warsh to succeed Jerome Powell as Federal Reserve chair. Markets see Warsh as more inclined than other candidates to fight against rising price pressures. That stance may translate into hawkish monetary policy aiding the dollar, eroding the so-called debasement trade that had caused gold to soar.

“The unwinding of the metals rally, especially in gold and silver, is driving the dollar’s strength,” said Andrew Hazlett, a foreign-exchange trader at Monex Inc. “Weak and overleveraged hands are being shaken out and the dollar is getting all the benefit from it, since the move into metals was primarily driven by debasement considerations.” Dollar Extends Advance to Second Day as Metals Drop, Oil Sinks_1

Dollar Extends Advance to Second Day as Metals Drop, Oil Sinks_1

Geopolitical events also rippled through currencies, after the US president said US and Iran are talking, driving oil lower. The Swiss franc, Norwegian krone and the yen — a mixture of haven and oil-linked currencies — were among the worst performers in the Group of 10. The greenback also rose along with Treasury yields after solid US factory data.

The dollar rebound from near a four-year low may have caught some investors off guard, given shorting the greenback was one of the most popular macro trades last month. Until the end of last week, Trump’s threats to acquire Greenland and his apparent acceptance of the currency’s selloff had fueled debate around the greenback’s long-term decline.

Options pricing remains bearish on the greenback overall, though positioning has moved away from last week’s extremes. On Jan. 27, the premium to hedge against dollar losses over the following month widened to a record.

“The foreign-currency market is normalizing after the dollar selling frenzy of January,” said Erik Nelson, a strategist at Wells Fargo. The market is unwinding of all the speculative and momentum-chasing dollar shorts that were established in mid-January, he said.

Asset managers boosted their bearish dollar positioning just days before news of Warsh’s nomination triggered the greenback’s biggest gain since May. Month-end flows may have amplified the greenback’s rebound, according to Europe-based traders, particularly as the technical backdrop pointed to a corrective move. Dollar Extends Advance to Second Day as Metals Drop, Oil Sinks_2

Dollar Extends Advance to Second Day as Metals Drop, Oil Sinks_2

Many market participants have warned of further dollar weakness. DoubleLine Capital Chief Executive Officer Jeffrey Gundlach said last week the greenback hadn’t acted like a haven currency for a while, and Trump’s unpredictable policy making and US deficits will weigh on it.

What Bloomberg Strategists Say...

“Amid the latest policy-driven selloff, the US currency has steeply diverged from its typical drivers such as the outlook for interest rates. With policy risks quieting down, traders’ attention will pivot back to economic fundamentals, which are likely to extend the dollar’s bounce in the short run.”

Source: Bloomberg

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Michael Ross

Forex

Economic

Data Interpretation

Bond

Foreign investors poured into the U.S. corporate bond market in January, buying debt at the fastest pace in nearly three years. According to data from JPMorgan Chase & Co., a combination of stable yields and lower currency hedging costs made American corporate credit an irresistible draw.

This surge in demand provides a sharp counter-narrative to fears that a weakening U.S. dollar might scare away international capital. So far, the flow of foreign money into corporate bonds has remained strong.

January Saw a Surge in Bond Buying

JPMorgan strategists Nathaniel Rosenbaum and Silvi Mantri reported that average net inflows from foreign buyers hit $332 million per day in January, the highest level recorded since February 2023.

While the pace moderated in the final week of the month—dropping 59% from the previous week to an average of $240 million—the overall monthly trend pointed decisively upward.

"Despite the concerns that a falling dollar is a sign of foreign investors selling US dollar securities, what we are seeing in credit so far seems to suggest the exact opposite," Rosenbaum noted. He highlighted "renewed very strong buying from Asia to start the year."

Why the Dollar's Dip Didn't Deter Investors

The U.S. dollar had a challenging January. A Bloomberg gauge tracking the currency fell 1.3%, its worst monthly performance since last summer, driven by geopolitical shifts and speculation of intervention to support the Japanese yen.

Typically, a falling dollar erodes the returns for foreign investors when they convert their assets back to their home currency. However, other factors proved more powerful. Rosenbaum explained that wide interest rate differentials between the U.S. and other nations, including Japan, have kept currency hedging costs low. This dynamic effectively neutralized the risk of a softer dollar, keeping U.S. debt attractive.

Looking Ahead: A Potential Boom in AI-Fueled Debt

The momentum may be set to continue. Some Wall Street strategists are now predicting that corporate bond sales could reach record highs in February, driven by a rush to finance new artificial intelligence projects.

In a separate analysis, Rosenbaum's team projected that high-grade debt issuance from the technology, media, and telecommunications (TMT) sector could reach an unprecedented $400 billion in 2026 alone.

To stay updated on all economic events of today, please check out our Economic calendar

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Natalie Gordon

Remarks of Officials

Political

Cryptocurrency

White House Engages Industry on Key Crypto Issues

The White House has entered direct talks with leaders from the cryptocurrency and banking industries to tackle a critical issue holding up a major digital asset bill: the regulation of stablecoin yields.

Officials from the Trump administration convened the meeting to find a path forward for the Digital Asset Market Clarity (CLARITY) Act, a piece of market structure legislation currently under review in the Senate. According to The Digital Chamber, a crypto advocacy organization, its CEO Cody Carbone was among the representatives who met with administration officials to hash out the bill's provisions.

The Digital Chamber confirmed the high-level meeting on X, highlighting stablecoin yield as a key issue for advancing comprehensive market structure legislation.

The CLARITY Act’s progress stalled in January after the Senate Banking Committee postponed a scheduled markup session. Lawmakers are still grappling with several complex topics before they can advance the bill, including:

• Tokenized equities

• Decentralized finance (DeFi)

• Ethics for elected officials investing in crypto

• Stablecoin rewards

Carbone described the White House meeting as "exactly the kind of progress needed" to resolve one of the bill's most significant obstacles. He added that he is "optimistic that as we continue to dive into the policy details, a fair playing field can be created for digital assets in the US."

This positive sentiment was echoed by White House crypto adviser Patrick DeWitt, who called the discussion "constructive, fact-based" and "solutions-oriented." He expressed confidence that officials and industry leaders would reach a solution soon. Other organizations present included the Crypto Council for Innovation, the American Bankers Association, and the Blockchain Association.

Navigating the Senate's Legislative Process

The high-level meeting occurred amid a partial US government shutdown, which entered its third day after lawmakers failed to agree on a funding bill.

The path for any crypto market structure bill is complex. The Senate is working through two separate but related legislative efforts that will eventually need to be reconciled.

Last week, the Senate Agriculture Committee passed its version of the bill, which focuses on the Commodity Futures Trading Commission's role. However, it did so without any Democratic support, as some members raised objections to rules concerning elected officials holding digital assets.

Meanwhile, the Senate Banking Committee is handling the sections of the bill that define how the US Securities and Exchange Commission will oversee the crypto space. For the legislation to reach a full floor vote, both committees will likely need to combine their respective bills into a single, cohesive package. The recent White House discussion signals a coordinated effort to clear the hurdles preventing that from happening.

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Isaac Bennett

Remarks of Officials

Stocks

Economic

Commodity

Daily News

Political

China–U.S. Trade War

President Donald Trump announces the new initiative from the White House.

President Donald Trump announced the creation of a U.S. critical mineral reserve late Monday, a move designed to reduce America’s reliance on China for materials vital to modern industry. The announcement immediately boosted the shares of domestic mining companies in after-hours trading.

The initiative, dubbed "Project Vault," will establish a strategic stockpile of critical minerals specifically for the U.S. private sector. According to a White House official, the plan is backed by a combination of $1.67 billion in private capital and a $10 billion loan from the U.S. Export-Import Bank.

The core objective is to secure a domestic supply chain for materials essential for electric vehicles, advanced defense systems, and other critical technologies, directly challenging China's dominance in the sector. The proposal was first reported by Bloomberg News earlier on Monday.

Miners Rally on Stockpile News

Investors reacted positively, betting the initiative will spur domestic demand and unlock government-backed financing for American mining operations. Key movers in extended trading included:

• MP Materials: The operator of California's Mountain Pass mine saw its shares climb over 2%.

• USA Rare Earth: The company's stock jumped by more than 2%.

• Critical Metals Corp.: Shares rose by over 1%.

Washington Deepens Its Role in the Minerals Sector

Project Vault builds on a trend of increasing government intervention in the critical minerals industry. This strategic shift is highlighted by several recent developments.

USA Rare Earth has already engaged in discussions with Commerce Secretary Howard Lutnick, presenting its domestic mining and magnet production assets. These talks have led to a proposed deal that could provide the company with approximately $1.6 billion in funding, subject to certain conditions, and would also include an equity stake for the U.S. government.

This follows a landmark agreement made last summer between the Department of Defense and MP Materials. That deal involved the government taking an equity stake, setting a price floor for minerals, and committing to a long-term purchase agreement for a specific quantity of rare earth minerals and magnets.

To stay updated on all economic events of today, please check out our Economic calendar

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Manuel

Stocks

OpenAI (OPAI.PVT) is unsatisfied with some of Nvidia’s (NVDA) latest artificial intelligence chips, and it has sought alternatives since last year, eight sources familiar with the matter said, potentially complicating the relationship between the two highest-profile players in the AI boom.

The ChatGPT-maker’s shift in strategy, the details of which are first reported here, is over an increasing emphasis on chips used to perform specific elements of AI inference, the process when an AI model such as the one that powers the ChatGPT app responds to customer queries and requests. Nvidia ‌remains dominant in chips for training large AI models, while inference has become a new front in the competition.

This decision by OpenAI and others to seek out alternatives in the inference chip market marks a significant test of Nvidia’s AI dominance and comes as the two companies are in ‌investment talks.

In September, Nvidia said it intended to pour as much as $100 billion into OpenAI as part of a deal that gave the chipmaker a stake in the startup and gave OpenAI the cash it needed to buy the advanced chips.

The deal had been expected to close within weeks, Reuters reported. Instead, negotiations have dragged on for months. During that time, OpenAI has struck deals with AMD (AMD) and others for GPUs built to rival Nvidia’s. But its shifting product road map also has changed the kind of computational resources it requires and bogged down talks with Nvidia, a person familiar with the matter said.

On Saturday, Nvidia CEO Jensen Huang brushed off a report of tension with OpenAI, saying the idea was “nonsense” and that Nvidia planned a ⁠huge investment in OpenAI.

"Customers continue to choose NVIDIA for inference because we deliver the ‌best performance and total cost of ownership at scale," Nvidia said in a statement.

A spokesperson for OpenAI in a separate statement said the company relies on Nvidia to power the vast majority of its inference fleet and that Nvidia delivers the best performance per dollar for inference.

Seven sources said that OpenAI is not satisfied with the speed at which Nvidia’s hardware can ‍spit out answers to ChatGPT users for specific types of problems such as software development and AI communicating with other software. It needs new hardware that would eventually provide about 10% of OpenAI’s inference computing needs in the future, one of the sources told Reuters.

The ChatGPT maker has discussed working with startups including Cerebras and Groq (GROQ.PVT) to provide chips for faster inference, two sources said. But Nvidia struck a $20-billion licensing deal with Groq that shut down OpenAI’s talks, one of the sources told Reuters.

Nvidia's decision to snap up key talent at Groq looked like an effort to shore up a portfolio of technology to better compete in a rapidly changing AI industry, chip industry executives said. Nvidia, in a statement, said that Groq's intellectual property was highly complementary ‌to Nvidia's product roadmap.

NVIDIA ALTERNATIVES

Nvidia’s graphics processing chips are well-suited for massive data crunching necessary to train large AI models like ChatGPT that have underpinned the explosive growth of AI globally to date. But AI advancements increasingly focus on using trained models for inference and reasoning, which could be a new, bigger stage of AI, inspiring OpenAI's efforts.

The ChatGPT maker’s search for GPU alternatives since last year focused on companies building chips with large amounts of memory embedded in the same piece of silicon as the rest of the chip, called SRAM. Squishing as much costly SRAM as possible onto each chip can offer speed advantages for chatbots and other AI systems as they crunch requests from millions of users.

Inference requires more memory than training because the chip needs to spend relatively more time fetching data from memory than performing mathematical operations. Nvidia and AMD GPU technology relies on external memory, which adds processing time and slows how quickly users can ⁠interact with a chatbot.

Inside OpenAI, the issue became particularly visible in Codex, its product for creating computer code, which the company has been aggressively marketing, one of the sources added. OpenAI staff attributed some of Codex’s weakness to Nvidia’s GPU-based hardware, one source said.

In a January 30 call with reporters, CEO Sam Altman said that customers using OpenAI’s coding models will “put a big premium on speed for coding work.”

One way OpenAI will meet that demand is through its recent deal with Cerebras, Altman said, adding that speed is less of an imperative for casual ChatGPT users.

Competing products such as Anthropic’s Claude and Google’s Gemini benefit from deployments that rely ‍more heavily on the chips Google made in-house, called tensor ⁠processing units, or TPUs, which are designed for the sort of calculations required for inference and can offer performance advantages over general-purpose AI chips like the Nvidia-designed GPUs.

NVIDIA ON THE MOVE

As OpenAI made clear its reservations about Nvidia technology, Nvidia approached companies working on SRAM-heavy chips, including Cerebras and Groq, about a potential acquisition, the people said. Cerebras declined and struck a commercial deal with OpenAI announced last month. Cerebras declined to comment.

Groq ⁠held talks with OpenAI for a deal to provide computing power and received investor interest to fund the company at a valuation of roughly $14 billion, according to people familiar with the discussions. Groq declined to comment.

But by December, Nvidia moved to license Groq’s tech in a non-exclusive ‌all-cash deal, the sources said. Although the deal would allow other companies to license Groq’s technology, the company is now focusing on selling cloud-based software, as Nvidia hired away Groq’s chip designers.