The Fed Can’t Seem to Satisfy Bond Traders or Trump
The first interest-rate cut in a decade was modest but could be just the beginning.
Powell can talk all he wants, be he's going to come around in the end.
Photographer: Joshua Roberts/BloombergWho said it? “A small rate cut is not enough, but we will win anyway!”
The answer, technically, is President Donald Trump, who again this week fumed about the European Union and China on Twitter while lamenting that the Federal Reserve raised interest rates “way too early and way too much.” But it just as well could have been bond traders. Their initial take on Wednesday was clearly disappointment that the Fed cut its benchmark lending rate by “only” 25 basis points and ended its balance-sheet runoff. Two-year U.S. Treasury yields shot higher by as much as 5 basis points to 1.86% and the yield curve flattened. In another signal of the hawkish interpretation of the Fed’s decision, the U.S. dollar strengthened.