While Wall Street tried to elucidate the confusing message of Federal Reserve President Jerome Powell to project the future of US monetary policy, Donald Trump arrived with an announcement that seems to clarify the matter, but which in turn stirred the markets intensely.
Just one day after the end of the round with which China and the US resumed trade negotiations, and with a series already scheduled for next month, the president said that on September 1, new tariffs would be imposed on goods for the US $ 300,000 million, which increased from 68% to 92% the chances of a low Fed rate at its next meeting.
Trump claimed on the previous day that what was expected of the Federal Reserve was the beginning of a cycle of prolonged and aggressive rate reduction, “ensuring that he was” disappointed “by Powell, who said the cut they applied was a “Half cycle adjustment” and not the first of a significant number of rebates.
Given the context, the escalation in the economic tensions that the president favors is aligned with the intensification of his pressures on the Fed, so that he can loosen the policy more decisively. “The staggering tariffs will probably lead to another rate cut sooner rather than later, and the possibility of a third rebate this year is quite high,” Sam Bullard, senior economist at Wells Fargo, told PULSO.
Indeed, not enough with the 10% tariffs, aimed at Chinese goods that until now did not face, Trump said that if there were no advances, he could increase them to 25%, leaving them at the same level of the current tariff that affects the US $ 250,000 millions of imports
“We thought we had an agreement with China three months ago, but unfortunately China decided to renegotiate the agreement before signing it,” Trump argued on the social network. “I think President Xi (Jinping) wants to make a deal, but frankly, they aren’t doing it fast enough.”
The US president presented the new measures against the Asian giant after the arrival of the Secretary of the Treasury, Steven Mnuchin, and the trade representative, Robert Lighthizer, from Beijing. The leaders of the US side in the negotiation met on Tuesday and Wednesday with the vice premier, Liu He, in a dialogue that did not show much progress and demonstrated its failure after the new attack.
With an even more challenging tone, from the Trump White House he stressed: “If you no longer want to trade with us, it would be fine for me,” adding that “until there is an agreement, we will apply taxes.”
By the time he made those statements, the bags were already retreating actively. Trump’s announcement on Twitter shortly before 1:30 pm erased all the rebound recorded by Wall Street, which in the morning regained ground after the decline noted on Wednesday by Powell’s weak message.
Yesterday, the losses in the central New York squares were led by the Dow Jones, with a fall of 1.05%. In turn, Caterpillar figured as one of its companies that fell most. Considered a thermometer of the world economy, the manufacturing company decreased 4%, registering a loss of stock market value of almost US $ 4,000 million.
The losses were repeated in Latin American places, including the Ipsa, which yielded 0.64%. In that case, the worst performance was SQM, which fell 4.84%, after deepening the casualties it noted when the new escalation in the economic war was known.
The Treasury bond also accused the coup. Its 10-year performance remained at 1,894% at -12.1 bp, marking its lowest level since November 2016.
The raw materials were others affected by Trump’s scramble. The Bloomberg Commodities Index fell 2.48%, with the most significant decline in just over a year. Among all, oil was the most affected, seeing a reduction in its WTI price by 7.9% to the U.S. $ 53.95, recording the most general decline since February 2015.