Equity Rebound Sputters as Trump Goes On the Offensive – US Market Wrap

A rebound in US stocks evaporated this week after Fed’s Powell pushed back on the idea of the Fed stepping in to bolster markets, rankling Trump who touted a smattering of deals Thursday.

The S&P 500 rose 1.5% over four days, recouping losses after Trump announced a trade deal with the European Union without providing details or a date for when an agreement would be reached. He was more definitive on a vital US-Ukraine minerals agreement, saying it would be signed next week. Choppy trading ahead of Friday’s vacation left the tech-heavy Nasdaq 100 down 2.3% for the week.

Trump lashed out at the Fed chair on social media, saying Powell’s removal from his position can not come soon enough, contending that the central bank should have decreased interest rates already this year, and should do it now. Later in the day, Trump informed reporters that he could remove Powell if he wanted to.

The criticism came after Fed’s Powell pierced the market calm Wednesday by indicating he would take a ‘wait-and-see approach’ to how the trade war would impact inflation, dashing hopes for an immediate intervention. The movements were considerably smaller than the previous week, when Trump’s trade war manoeuvres caused dramatic fluctuations in equities, bonds, and the currency.

All of the protectionist policy shifts have damaged trust in the world’s reserve currency, extending the dollar’s losing streak into the third week.

In the bond market, Treasury rates rose Thursday as US government bonds erased their weekly gains. Rising oil prices, as well as Trump’s scathing remarks about Powell, added pressure.