Investors are recalibrating fast as President Trump and Federal Reserve Chair Jerome Powell appear to be heading toward a serious confrontation over the future of US interest rates—one that could jolt markets worldwide – predicts a global financial advisory giant.
Trump wants rates down—and soon. Powell isn’t budging. That brewing conflict has now burst into the open, and global investors are no longer waiting to see how it ends.
“This isn’t just a disagreement over timing. It’s a power struggle between fiscal force and monetary independence,” says Nigel Green, CEO of deVere Group. “Markets are reacting. And they should be.”
Yields are rising as traders price in tighter policy for longer, even while Trump ramps up calls for cuts to juice the economy and fund an ambitious agenda. The 2-year Treasury yield has climbed sharply in recent days, sending a clear message: investors are bracing for a standoff.
According to Nigel Green: “The risk is now twofold. First, that Powell holds the line and policy stays restrictive longer than markets had priced. Second, that Trump intervenes—publicly or politically—sparking concerns over central bank independence.”
The stakes are enormous. Trump’s spending plans, his push for tax cuts, and his protectionist tone are fueling expectations of higher deficits and potentially higher inflation. Powell, meanwhile, continues to signal caution, with sticky core inflation and lingering wage pressure keeping rate cuts off the table for now.
“Investors are facing a scenario where two of the most powerful forces in global economics are pulling in opposite directions. This is a policy gap and a market catalyst,” adds the deVere CEO.
The dollar has strengthened on safe-haven flows, but currency markets are jittery. Risk-sensitive currencies are under pressure. Gold is firming. Hedges are getting more expensive.
“It’s no surprise we’re seeing sharp moves in rates and FX. If Powell resists, volatility spikes. If he bends, inflation fears return. Either way, the collision has started to shape capital flows,” notes Nigel Green.
Global investors are taking action. Some are rotating into assets that can ride out political disruption. Others are doubling down on dollar positions, betting Powell holds firm. But there’s a growing sense that this isn’t a passing moment—it’s the start of a new era of policy confrontation.
“The Fed is under pressure like never before. Trump wants control. Powell wants credibility. Markets are stuck in the middle,” says Nigel Green. “This is now a defining test for how much autonomy the central bank still has—and how far a president is willing to go to drive growth on his terms.”
deVere is advising clients to stay defensive but opportunistic—diversify, protect downside, and look for investments that can benefit from rising volatility.
“This is not business as usual. It’s a policy collision that can be expected to drive currency, rates, and equity markets for the rest of the year,” he concludes. “Investors must be alert, decisive, and globally diversified.”
deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of offices around the world, more than 80,000 clients, and $14bn under advisement.
