President Trump, "Fed Behind Market Turmoil, Not Trade War"


President Donald Trump blasted the Federal Reserve on Wednesday, saying the central bank was too quick to raise interest rates and too slow to lower rates.

The U.S. Treasury yield curve temporarily inverted for the first time in 12 years, prompting investors to move sell stock in companies and move it into bonds. China is not our problem, though Hong Kong is not helping.

US allies such Germany and New Zealand have recently made significantly more aggressive rate cuts. At the Fed's next policy meeting, in July, policy makers voted to cut the benchmark federal-funds rate by a quarter of a percentage point to a range between 2% and 2.25%.

The inversion rattled investors already anxious that a U.S. In a tweet he called Fed Chairman Jerome Powell "clueless".

Trump told reporters Thursday that talks with China set for September are "still on" - less than a week after he said they might be canceled - and trade negotiators also have been in contact by phone.

The Bank of Japan is similarly looking at lowering its negative interest rates and expanding asset purchases.

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Complaints about the military exercises are also no surprise since Kim has been very public in his denunciations of them. The tests violate United Nations Security Council resolutions that ban North Korea from any ballistic missile activity.

Along with the rate cut at the last Fed meeting in July, it would also mean the USA central bank will have used up nearly half the rate-cut "ammunition" assembled during a slow-moving, and ultimately truncated series of rate increases begun in 2015.

The European Central Bank had just ended its stimulative bond purchase program while the Fed was seen as likely to continue hiking rates after raising borrowing costs four times in 2018. Or if the Fed appears to be in denial about the need to cut rates sharply but is expected to figure it out sooner or later, that's another reason long-term yields would fall. He has been berating the Fed for its rate increases for more than a year - since even before his trade rift with China morphed from being considered an economic annoyance to a larger and potentially durable risk.

Trump also railed against the "crazy inverted yield curve", which showed-up yesterday, and whose presence has preceded nine of the last 10 economic recessions to batter the United States.

Compared to the prior two recessions, the Fed may actually be ahead of the curve.

While Wall Street was dealing with the ramifications of investor sell-offs and worrying bond market signals, the president took to Twitter to argue that "unlike others, our economy is strong".