US Markets Smashed as Trump Attacks Fed – Nasdaq Down 2.5%
US markets took a big hit again yesterday as President Trump attacked Jerome Powell and the Federal Reserve Bank, demanding rate cuts. All three of the major indices finished sharply lower: the Dow dropped 2.48%, the S&P lost 2.36%, and the Nasdaq closed 2.55% in the red. The dollar took a big hit, with the DXY losing 0.71% on the day, taking it down to 98.37—levels not seen for over three years. Treasury yields were mixed, with the 2-year dropping 3.6 basis points to 3.762%, whilst longer dates rallied, the benchmark 10-year closing up 8.6 basis points at 4.411%. Oil prices dipped on news that there has been progress in talks between the US and Iran—Brent down 2.1% to $66.53 and WTI down 2.47% to $63.08. Gold prices surged higher yet again on the weaker dollar and increased market uncertainty after Trump’s comments, up 2.7% to yet another all-time high, closing the session at $3,424.19 an ounce.
Trump Hurting US Markets Again
Both US stocks and the dollar took a big hit in trading yesterday as President Trump launched another attack on Jerome Powell and the Fed for not cutting interest rates. The irony, of course, is that the Fed was fully expected to be in an easing cycle now, but they have pushed rate cut expectations back due to Trump’s aggressive stance on trade, which has greatly increased inflation fears. Investors have reacted strongly again to the latest comments from the Oval Office, which are now putting doubts on the independence of the Federal Reserve and threats from Trump on Powell’s position. This is only adding more uncertainty to global markets—and more particularly, US markets—and traders are preparing for more volatility and potential downside moves in the days ahead.
Volatility to Remain High as Major Centers Return
Traders are expecting volatility to remain elevated today as several major trading centers return from a long weekend break to digest the latest geopolitical updates out of the US. The macroeconomic calendar is relatively quiet again, but Asian bourses are expected to start out on the back foot after another bad day on Wall Street. There are no Tier 1 data releases scheduled in the European session; however, Euro traders will be glued to screens midway through the day, with ECB President Christine Lagarde due to be interviewed. The New York session has just the Richmond Manufacturing Index data due out (exp -6.0) early in the day, but we also hear from Fed members Jefferson, Harker, and Kashkari during the day, and investors will be keen to see if there is much of a response to President Trump’s attack.
