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

USA president Donald Trump attacked the Federal Reserve again, while defending his trade war, as yields on U.S. 30-year bonds hit record lows.

Trump wrote on his Twitter feed that "our problem is with the Fed" for being too slow in cutting interest rates.

"We should easily be reaping big rewards and gains, but the Fed is holding us back", Trump said.

As of 1 p.m. EDT., the Dow Jones Industrial Average (DJIA) had fallen more than 700 points amid analyst projections of a global recession and the ongoing effects of a trade war.

"We'll be talking about the economy", Trump said in an interview with New Hampshire conservative radio talk show host Jack Heath.

The sell-off came shortly after the yield on the 10-year US Treasury note briefly dipped below the yield on the two-year, a dynamic that has been a reliable harbinger of past recessions.

"Our problem is with the Fed", Trump tweeted. He also said he doesn't think the Fed needs to call an extraordinary meeting to potentially lower interest rates sooner than planned.

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That's the sort of concern that officials worry will sap USA economic growth and helps explain why they reduced interest rates last month for the first time since 2008.

President Trump on Thursday touted Walmart's "outstanding" quarterly-earnings report as evidence that the United States economy is "doing great" amid fears of a looming recession.

By easing financial conditions, a central bank can stimulate an economy by making business and consumer loans cheaper, while the depreciation of the local currency that results from lower interest rates can boost exports.

These results contributed to London's FTSE 100 closing more than one per cent lower on Wednesday, while markets in Germany and France finished the day more than two per cent down. 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. There has also been a reduction over time in the typical size of the term premium, meaning the economic outlook doesn't have to move as far from neutral as it used to for the yield curve to invert.

Stocks reacted to the inversion Wednesday by selling off sharply.

You may have been surprised to see headlines today saying the yield curve has inverted for the first time in over a decade, because you've probably seen the occasional headline over the past few months about the yield curve already being inverted.

In an interview scheduled to air on Fox Business Network on Friday, former Fed chief Janet Yellen said she felt the US economy remained "strong enough" to avoid a downturn, but "the odds have clearly risen and they are higher than I'm frankly comfortable with".

  • Darren Santiago