Good morning on this best day of the week, Wednesday from your Hometown Lender,
Rates this a.m. are a little better but volatility is high, and we are seeing the gains evaporating. Treasury Secretary Bessent has walked back his comments on tariff negotiations with China saying there are no active talks ongoing.
There are two reasons behind today’s gains…
- President Trump basically said, “Nope, I’m not firing Jerome Powell,” even though he’s clearly annoyed the Fed isn’t slashing interest rates faster. He called out the media for blowing things out of proportion and said he just wants Powell to hustle a bit more on the rate cuts. Markets are glad to hear it, at least for now. We all know that Trump is mercurial, and we could get a different tune later, especially as Bloomberg journalist John Authers points out that this “endorsement” came as an ad hoc reply to a reporter’s question.
- Trump’s turning down the heat on China—for now. He said he plans to be “very nice” in trade talks and hinted that tariffs could drop significantly if a deal happens (but not all the way to zero). He also said he doesn’t see the need to “play hardball” with Chinese leader Xi Jinping, and that during discussions he wouldn’t talk about Covid-19, a politically sensitive issue especially since the White House recently launched a website that suggested the virus came from a Wuhan lab.
The world is just not interested in US assets for the moment. This is putting pressure on bonds and stocks.
