Trump blames Fed for stock rout, says central bank ‘ridiculous’

A screen above the floor of the New York Stock Exchange shows the closing number of the Dow Jones industrial average Wednesday Oct. 10 2018. The Dow Jones Industrial Average plunged more than 800 points its worst drop in eight months led by sharp dec

And while he acknowledged higher rates helped savers, he criticized the Federal Reserve's tactics as 'too aggressive'.

"But I really disagree with what the Fed is doing", Trump added.

Global stock markets fell again on Thursday as investors anxious about signs of slowing growth, rising trade tensions and higher interest rates.

Well, take that for what it's worth.

That was after saying the Fed had "gone loco", using the Spanish term for "crazy", and blaming the independent institution - normally off limits in public criticism - for the sharp downturn in global stock markets Wednesday.

Now, explaining market actions through psychology is probably as much a mug's game as psychoanalyzing a Fed chair from afar. Some analysts ascribed the Wednesday downturn, which moderated but continued on Thursday, at least in part to the International Monetary Fund downgrade to global growth.

In fact, "interest rates are very low given how strong the economy is, given where inflation is and given where unemployment is", Mr Wessel said.

USA interest rates have been on a steady march higher for two years.

People are comfortable being short the bond because Fed is still tightening, and because the number of bonds that are coming to us will get bigger.

In effect, higher mortgage rates could depress the rate of price appreciation of houses, as homebuyers cannot bid as aggressively for properties as they could when rates were lower. London also lost almost 2 percent, Frankfurt fell 1.5 percent, and Tokyo plunged almost 4 percent.

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Then, because everything is connected, the bond selloff might have fed the rout on Wednesday.

Trump said Tuesday that the economy is enjoying "record-setting" numbers and "I don't want to slow it down even a little bit, especially when we don't have the problem of inflation".

US stocks tumbled yesterday, with the S&P 500 and the Dow marking their biggest daily declines since February 8, and technology stocks were at the centre of the carnage as rising US Treasury yields sent investors fleeing from risky assets. Even before Trump's comments, the dollar was down from a 7-week high after a fall in U.S. bond yields.

Does the market fear the Fed will respond to inflationary signals with more hikes than previously expected, maybe enough to hurt corporate profits, or dim the US economy into recession?

An hour later, Trump was back to calling out the Fed and maintaining they are "making a mistake", making his case once again that the Federal Reserve should stop increasing interest rates.

This all makes sense, but it might be based on some questionable assumptions. Housing has already shown softness in some markets in recent months. In Japan, 10-year bonds are not even paying 15 basis points.

Powell's goal is to extend the second-longest USA economic expansion on record by moving interest rates up just quickly enough to prevent overheating, but not so rapidly that the central bank chokes off growth. The yield on the 10-year Treasury note fell to 3.15 percent from 3.22 percent late Wednesday. Toronto's main index lost 336.65 points or 2.1 per cent, to 15,517.40. But the logic behind the Fed policy is not founded on inflation. "The Fed will stay on a measured pace".

Efforts to cool down the market generally accompany rises in inflation, but there are few signs of that at the moment. The president also selected Nellie Liang, a former Fed division director who is a Ph.D. economist with expertise in financial stability.

"The US tech bubble may take a while to burst and we are facing many external uncertainties - trade wars, risks in emerging markets currencies and oil price".

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