Trump’s Policy Shifts Stir U.S. Market Volatility

2 mins mins

Key Points:

Trump’s policy moves trigger bank and defense stock declines.
Midterm elections may shape future market trends.
Fed independence concerns further unsettle investors.

Ed Clissold of Ned Davis Research highlights “Big MAC Trade,” reflecting potential market shifts ahead of U.S. midterms, driven by President Trump’s recent policy maneuvers..

These strategic shifts risk unsettling markets, particularly by challenging Federal Reserve independence, affecting bank and defense sectors, and creating investor uncertainty pre-midterms.

U.S. Stocks React to Trump’s Financial Policies

Bank stocks dropped after Trump urged a credit card interest rate cap at 10%, while defense stocks fell due to a halt on dividends to divert funds to production. These measures cause market uncertainty, impacting investor confidence and fueling volatility.

Ed Clissold noted, “Policy adjustments targeting specific industries will pose a significant risk.” Market players remain unsure how to hedge against these risks, leading to broader Wall Street concerns. Clissold emphasizes the importance of monitoring Fed independence challenges amid these changes.

Historical Precedents and Current Market Anxieties

Did you know?
In situations where the Fed’s independence is questioned, historical precedents suggest markets often grapple with uncertainty, as observed during the initial tenure of new Fed chairs, marked by notable corrections in the early months.

Historical market behavior indicates corrections often occur when policy uncertainties prevail, magnified by factors such as Fed independence challenges. The market is particularly sensitive when significant policy redirections are proposed, eliciting a mix of caution and recalibration among investors.

As market analysts evaluate these developments, concerns about credit spread widening and inflation prospects gain traction. Expert perspectives suggest watching upcoming midterms closely, as policy direction may significantly influence market stability in the coming months.

“Top of the list is what could go on with the Fed… we have a readymade concern with Fed independence.” — Ed Clissold, CNBC interview, Dec 15, 2025

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.