TRUMP SPEECH, FED & TRADE – TALKING POINTS:
- US President Trump’s attack on the Federal Reserve was reignited today with Trump stating that the US should have lower rates and is at a disadvantage compared to other low-rate counties
- Tariffs on China will be raised ‘substantially’ if no phase one trade agreement is reached after softening language by saying a deal ‘could’ happen
- Trump also takes some jabs at the European Union after stating that EU trade barriers are worse than in China which pushed EURUSD[1] to session lows
President Trump delivered remarks on trade policy today at the Economic Club of New York. Trump continued his attack on the Fed as he harped on interest rates by saying we are in competition with countries who have negative rates. Furthermore, Trump said “We should be paying, by far, the lowest interest.”
The market’s reaction was largely muted to this recurring theme seeing that Trump has previously waged not-so-subtle attacks on FOMC[2] monetary policy being too tight and holding back the US economy. Markets were gaining broadly headed into Trump’s speech with the S&P 500 Index setting another record high with the market-cap weighted benchmark touching 3,106.20 before moving modestly lower.
SPX and Gold (XAUUSD) (5-Min Chart)
Sentiment around trade talks have seen an optimistic lift since the two sides reached a tentative ‘phase-one’ agreement last month. Trump said that if a deal is not made with China, tariffs would be raised significantly which set a more pessimistic tone. Markets largely ignored the negative comment as Trump has gyrated before with his public commentary on China and trade deal progress.
Another jab – and arguably less expected – came when Trump remarked on the European Union’s trade policies saying that the EU has
