Trump has opened fire on the Fed chief on his Truth Social platform, saying Powell's "termination cannot come soon enough" and calling him a "major loser".
Powell's stance is that rates should not fall until it is clear Trump's tariff plans won't fuel a surge in inflation.
The Polymarket online betting platform for political events shows its users are placing a 21% chance on Trump removing Powell from his post this year, before the Fed chair's term expires in May 2026.
Nervousness over Trump's war of words has spread to Main Street as well.
Google Trends shows searches among U.S.-based users for "Jerome Powell" have spiked to their highest in at least five years, along with "apply for UK visa".
It's not clear if Trump has the authority to remove Powell before his term is up next year. Even if he were successful in doing so, the way the Fed is structured means the remaining board members and regional bank presidents still set monetary policy.
Trump's initial social media post last week criticising Powell barely caused a ripple across markets, which were very much in recovery mode, attempting to find some kind of stability after the two-week roller coaster of early April.
But his post on Monday, in which he warned the economy would slow unless Powell cut rates, hit a market with very little in the way of liquidity - given much of the world was off for the Easter break - stripping more than 2% off the S&P and the Nasdaq, hitting Treasury prices and the dollar.
"With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW," Trump's post said.
U.S. consumer inflation eased in March, thanks to declines in the price of gasoline and used vehicles. But tariffs are likely to raise the cost of most imported goods and could fuel a resurgence in price pressures. A recent measure of where consumers believe inflation will be in a year's time shot to the highest since 1981.
Even if the legality of removing Powell is unclear and Trump's verbal attacks amount to little more than that, it raises the question of the independence of the world's most powerful central bank, striking another blow to confidence.
And if there is one thing sorely lacking right now, it's confidence -- specifically, confidence in U.S. markets.
Treasuries have been so badly battered this month that the premium investors demand to hold U.S. 10-year debt rather than German bonds has increased by 48 basis points so far in April to nearly 200 basis points, heading for its biggest monthly rise since June 2003, according to LSEG data.
Meanwhile, the S&P 500 has given up all its edge over the rest of the world. So far this year, the benchmark U.S. index has fallen 13%, while the MSCI All-World Ex-US index has risen 4.2%. There are worse performers out there. Tokyo's Nikkei has fallen 14%, but this is partly a function of Japanese monetary policy and the performance of the yen. The S&P has just recorded its worst performance over the first four months of the year against the rest of the world, as measured by the MSCI index, since 1993.
There's a clear "major loser" right now and it's on Wall Street.
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