President Trump Renews Attack on Federal Reserve in Speech to the Economic Club of New York

 

“Give me some of that money.” President Trump voiced his displeasure with the Fed for the umpteenth time in a speech yesterday, suggesting that the Fed’s hesitance to lower rates into negative territory was preventing the US from competing with the EU and Japan (where policy rates are negative). Jerome Powell will have an opportunity to give his perspective on monetary policy and the economic outlook today when he testifies before the Congressional Joint Economic Committee.

 

 

Rates fall as markets continue to focus on trade talks between the US and China. Apart from his criticism of the Federal Reserve, President Trump also indicated in his speech yesterday that a “phase one” trade agreement was close to resolution and that it “could happen soon.” Trump added that the US will raise tariffs on Chinese goods if the deal does not materialize, upping the ante on this first step of a broader trade agreement. The 10-year Treasury yield fell 1 bp to 1.93% but is down a further 6 basis points this morning.

 

 

Consumer Price Index rises slightly more than expected, inflation still appearing muted. October’s CPI numbers showed a headline inflation rate of 1.8%, slightly more than the 1.7% level forecasted. Inflation will be of renewed focus after Chairman Powell explicitly said the Fed would need to see inflation persistently above their 2% target before they’d consider increasing their policy rate.