Global Investors Eye International Diversification Amid Fed Probe Concerns

The criminal investigation into Fed Chair Jerome Powell prompts investor concerns about central bank independence. Some investors consider diversifying beyond U.S. assets amid fears of American economic instability. Market reactions remain mild, but ongoing tensions may impact long-term investments in U.S. assets.

The investigation into Federal Reserve Chair Jerome Powell has sparked investor jitters regarding the independence of the central bank. This has renewed interest among some investors in diversifying their portfolios beyond U.S. assets, as they ponder the potential risks to American economic stability.

While market reactions have been restrained, with neither significant shifts in U.S. Treasury yields nor the dollar, strategists like Seth Meyer at Janus Henderson highlight the importance of international diversification. Investors remain wary, remembering last year's market volatility stemming from tariff-induced disputes.

The long-term consequences of this probe and concerns about Fed autonomy keep investors on alert. Although economic fundamentals like growth and AI investment momentum support U.S. markets, questions persist, potentially pushing investors to explore alternatives globally.

(With inputs from agencies.)