Recap | 12 January 2026
- Edward von der Schmidt
- 5 days ago
- 6 min read
Facing probes, Powell defends Fed independence
Iranian crackdown prompts US tariffs, military planning
NATO's fate tied to Greenland's
Stocks, metals climb to records as dollar weakens, oil rallies
Credit card cap proposal weighs on banks
Snap election prospects in Japan see weaker yen
US steps up rhetoric against Russia at UN
G7 plots rare earths strategy
Germany inks agreements with India
EU and China seek to resolve EV tariffs
US and Taiwan negotiate tariffs, chip investments
EDWARD VON DER SCHMIDT
Headlines
Facing probes, Powell defends Fed independence
"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."
Federal Reserve Chair Jerome Powell brought the latent tension between the nation's independent central bank and the Trump administration to the fore on Sunday evening. Powell spoke to a DOJ subpoena related to prior Senate testimony as a pretext for the White House to influence Fed policy through coercion.
The administration appeared to distance itself as previous Fed officials and members of Congress alike criticized the action.
Comment: The White House's pressure on Powell goes beyond control of the Federal Reserve Board or the Federal Open Market Committee and monetary policy. The Fed's independence challenges the administration's notion of executive primacy. Being unable to dictate the composition of the Board at will or to directly influence interest rates would necessarily imply limits to President Trump's power.
On January 21, the Supreme Court will hold a pivotal hearing related to Governor Lisa Cook, who President Trump attempted to fire last year. Serving staggered 14-year terms to deter political meddling, Governors may only be removed for cause. The Court could decide whether and what unproven allegations constitute such cause and thereby delineate the White House's authority to remove Fed officials in general.
While Powell's time as Chair is scheduled to end in May, he may serve as a Governor until 2028 and could influence future policy debates should he choose to remain at the Fed. Governor Cook's case will also determine how easy or difficult it will be for Trump to fire Powell.
The FOMC is even more likely to hold rates steady on January 28 as officials have already signaled, not only to pause and assess economic conditions but to assert their independence and protect the institution's hard-won credibility.
AP:
Federal Reserve Chair Powell says DOJ has subpoenaed central bank, threatens criminal indictment (1/11)
DOJ investigation of Fed Chair Powell sparks backlash, support for Fed independence
Bringing charges against the Fed: What we do (and don't) know
Reuters:
Trump administration probe of Fed's Powell sparks pushback
Donald Trump versus the Federal Reserve - what you need to know
Bloomberg:
Fed That Fights Back Is a Threat to Trump's Takeover Plan
Exclusive: Jeanine Pirro Is Going After Powell, Heedless of Backlash
WSJ:
U.S. Prosecutors Are Investigating Fed Chair Jerome Powell
Trump Allies and Officials Fear Blowback From Powell Probe
The Fed-Trump Feud: What You Need to Know
Wall Street, Former Fed Officials Slam Powell Probe
Iranian crackdown prompts US tariffs, military planning
A mounting death toll in Iran amid widespread protests accompanied by adversarial rhetoric from the regime prompted an economic reprisal and the prospect of US intervention.
President Trump announced that countries "doing business" with Iran would be subject to 25% secondary tariffs, without providing clarifying details or an accompanying order. Note that China is the largest importer of Iranian oil (Reuters).
The Wall Street Journal reported that the administration will consider potential measures on Tuesday, which could include cyber campaigns or direct strikes.
AP:
Trump says Iran trade partners will face 25% tariffs from US as he looks to pressure Tehran
Iran's leadership is under pressure as protests continue. Here's what to know
Reuters:
Trump weighs response to Iran crackdown, Tehran says communication open with US
Trump says nations doing business with Iran face 25% tariff on US trade
Bloomberg:
Trump Vows 25% Tariff on Countries Doing Business With Iran
Iran Claims It's Quelled Protests Even as Unrest Continues
WSJ:
White House Weighs Iran's Nuclear-Talks Offer as Trump Leans Toward Strikes
U.S. to Impose 25% Tariff on Countries Doing Business With Iran, Trump Says
How the U.S. and Iran Went Back to the Brink of War
NATO's fate tied to Greenland's
High-level officials in Europe warned of dire consequences for NATO and economic ties with the bloc should the US choose to take Greenland by force, which the administration has declined to rule out (however improbable).
US delegations are scheduled to meet with representatives from Greenland and Denmark this week.
AP:
Britain is in talks with NATO to counter Russia and China in the Arctic (1/11)
How NATO works at a time of Trump's Greenland threats
Reuters:
Greenland says it should be defended by NATO, rejects any US takeover
European commissioner says US military takeover of Greenland would be end of NATO
US lawmakers plan Denmark visit as Trump threatens Greenland takeover
WSJ:
Military Experts Reject Trump's Logic That U.S. Must Own Greenland to Defend It
Markets & Economies
Stocks, metals climb to records as dollar weakens, oil rallies
Major US equity indices established new records on Monday after faltering in early trading. Though moves in Treasury yields were ultimately muted, the dollar weakened as silver and gold reached new highs. Oil's rally was attributed in part to Middle East supply risks stemming from Iran.
AP:
Wall Street ticks to records after shaking off worries about Trump's feud with the Fed
Reuters:
Stocks and Treasuries calm after Fed indictment jitters, dollar weakens
Oil extends climb on Iran supply disruption concerns
Bloomberg:
Stock Rally Builds, Yen Falls to Lowest Since 2024: Markets Wrap
WSJ:
U.S. Stocks End Higher, Gold Hits Record After Prosecutors Launch Powell Probe
Credit card cap proposal weighs on banks
President Trump's proposal to cap credit card rates at 10% weighed on the financial sector, notwithstanding implementation hurdles and almost certain legal challenges.
Comment: As appealing as interest rate caps may seem, price controls can also reduce available credit as lending becomes less profitable.
Reuters:
Financial stocks fall as Trump's credit card rate cap plan rattles investors
Banks warn consumers will be hurt by Trump's 10% cap on credit card interest rates
Snap election prospects in Japan see weaker yen
Reports of possible snap elections in Japan spurred a weaker yen given an anticipated fiscal expansion.
Reuters:
Japan PM Takaichi conveys plan to dissolve lower house to party executive, Kyodo says
Around the World
US steps up rhetoric against Russia at UN
The US amplified its criticisms of Russia at the UN in the wake of last Thursday's deployment of Oreshnik hypersonic missiles in Ukraine.
Comment: Public remarks between the US and Russia have become more adversarial as peace talks with Ukraine have stalled.
AP:
US accuses Russia of 'dangerous and inexplicable escalation' of war in Ukraine as Trump seeks peace
G7 plots rare earths strategy
G7 and other finance ministers agreed on potential avenues to reduce their reliance on Chinese rare earths exports. No official communique was released on Monday.
Reuters:
G7, other allies discuss ways to reduce dependence on Chinese rare earths
Germany's finance minister Klingbeil says Washington meeting addressed rare earth price floor
Germany inks agreements with India
German Chancellor Merz traveled to India to meet with Prime Minister Modi and sign security and other bilateral agreements as Europe seeks to bolster ties outside the US.
AP:
India and Germany sign deals to deepen economic and security ties
New US ambassador to India pushes for deeper trade ties despite tension over Russian oil
Reuters:
Germany's Merz floats possibility of EU-India trade deal by end of January
EU and China seek to resolve EV tariffs
The EU and China moved closer to resolving a trade spat involving electric vehicles, exploring price floors, quotas, and other mechanisms in lieu of tariffs.
AP:
China and EU agree on steps to resolve EV imports dispute
Reuters:
EU sets out firm conditions for China EVs to avoid tariffs
Bloomberg:
China EV Makers Rise as EU Mulls Minimum Price to Replace Tariff
US and Taiwan negotiate tariffs, chip investments
The US and Taiwan reportedly progressed on a plan to reduce tariffs on Taiwanese exports from 20%, to 15%, in line with levies on Japan and South Korea. In exchange, the world's largest fabricator would expand its investments in US chip-making capacity.
Reuters:
Taiwan says it has reached 'broad consensus' with US on tariff talks
Bloomberg:
Trump Team Nears Taiwan Trade Deal With More US Chip Investment
WSJ:
TSMC Plans U.S. Expansion in Proposed Taiwan Tariff-Relief Deal