Latest news with #Fed
Los Angeles Times
38 minutes ago
- Business
- Los Angeles Times
Trump's Fed battle is not like his other political tussles
President Trump is once again floating the idea of firing Federal Reserve Chair Jerome Powell, ostensibly in objection to excessively high interest rates. But this debate is not about monetary policy. It's a power play aimed at subordinating America's central bank to the fiscal needs of the executive branch and Congress. In other words, we have a textbook case of 'fiscal dominance' on our hands — and that always ends poorly. I'm no cheerleader for Powell. During the COVID-19 pandemic, he enthusiastically backed every stimulus package, regardless of size or purpose, as if these involved no trade-offs. Where were the calls for 'Fed independence' then? And where were the calls for fiscal restraint after the emergency was over? Powell failed to anticipate the worst inflation in four decades and repeated for far too long the absurd claim that it was 'transitory' even as mounting evidence showed otherwise. He blamed supply-side disruptions long after ports had reopened and goods were moving. And as inflation was taking a stubborn hold, Powell delayed raising interest rates — possibly to shield the Biden administration from the fiscal fallout of the debt it was piling on — well past the point when monetary tightening was needed. If this weren't the world of government, where failure can be rewarded — and if there had been a more obvious alternative — Powell wouldn't have been invited back for another term. But he was. And so Trump's pressure campaign to prematurely end Powell's tenure is dangerous. I get why with budget deficits exploding and debt-service costs surging, the president wants lower interest rates. That would make the cost of his own fiscal agenda appear more tolerable. Trump likely believes he's justified because he believes that his tax cuts and deregulation are about to spur huge economic growth. To be sure, some growth will result, though the effects of deregulation will take a while to arrive. But gains could be swamped by the negative consequences of Trump's tariffs and erratic tariff threats. No matter what, the new growth won't lead to enough new tax revenue to escape the need for the government to borrow more. And the more the government borrows, the more intense the pressure on interest rates. One thing is for sure: The pressure Trump and his people are exerting on the Fed is a push for fiscal dominance. The executive branch wants to use the central bank as a tool to accommodate the government's frenzy of reckless borrowing. Such political control of a central bank is a hallmark of failed monetary systems in weak institutional settings. History shows where that always leads: to inflation, economic stagnation and financial instability. So far, Powell is resisting cutting rates, hence the barrage of insults and threat of firing. But now is not the right time to play with fire. Bond yields surged last year as investors reckoned with the scale of U.S. borrowing. They crossed the 5% threshold again recently. Moody's even stripped the government of its prized AAA credit rating. Lower interest rates from the Fed — especially if seen as the result of raw political pressure — could further diminish the allure of U.S. Treasuries. While the Fed can temporally influence interest rates, especially in the short run, it cannot override long-term fears of inflation, economic sluggishness and political manipulation of monetary policy driven by unsustainable fiscal policy. That's where confidence matters, and confidence is eroding. This is why markets are demanding a premium for funds loaned to a government that is now $36 trillion in debt and shows no intention of slowing down. But it could get worse. If the average interest rate on U.S. debt climbs from 3.3% to 5%, interest payments alone could soar from $900 billion to $2 trillion annually. That would make debt service by far the single largest item in the federal budget — more than Medicare, Social Security, the military or any other program readers care about. And because much of this debt rolls over quickly, higher rates hit fast. At the end of the day, the bigger problem isn't Powell's monetary policy. It's the federal government's spending addiction. Trump's call to replace Powell with someone who will cut rates ignores the real math. Lower short-term interest rates will do only so much if looser monetary policy is perceived as a means of masking reckless budget deficits. That would make higher inflation a certainty, not merely a possibility. It might not arrive before the next election, but it will inevitably arrive. There is still time to avoid this cliff. Trump is right to worry about surging debt costs, but he's targeting a symptom. The solution isn't to fire Powell — it's to cure the underlying disease, which is excessive government spending. Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. This article was produced in collaboration with Creators Syndicate.
The Hill
38 minutes ago
- Business
- The Hill
Bessent tamps down Powell threats
Bessent was asked on MSNBC's 'Morning Joe' if the president should say he will let Powell finish his term to give certainty to the markets, after indications he would try to fire the head of the central bank have rattled them. The secretary pushed back on the question. 'I'm not sure where that question comes from, because President Trump has repeatedly said he's not going to fire Chair Powell,' Bessent said. 'He might like for him to resign, but he's not going to fire him. He's said that on numerous occasions. I think he may have even said it again yesterday.' The president said Tuesday he doesn't think Powell should resign before his term is up in May but bashed him for not lowering interest rates. 'I think he's doing a bad job, but he's going to be out soon anyway. In eight months, he'll be out,' the president said. When asked about the pressure campaign on the Fed chair to lower rates, Bessent said it is part of the role. 'I think anyone who goes into public service should expect pressure. I get pressure from the president, from the Congress, from constituents,' Bessent said.
Yahoo
3 hours ago
- Business
- Yahoo
‘Goldilocks' is ignoring the three bears, Wall Street analysts say
Markets are mostly maintaining their all-time highs despite Trump's tariffs, threats to Fed independence, and analysts reducing their expectations for U.S. GDP growth. Investors are instead enjoying a 'Goldilocks scenario,' Goldman Sachs says. Barclays agrees: 'Another week, another tariff salvo, and another market shrug.' S&P 500 futures are barely moving this morning after the index itself hit an all-time high yesterday, poking its head above 6,300 for the first time ever and closing at 6,305.6. In Asia and Europe, there was a small amount of profit-taking earlier today but nothing to be concerned about—equities remain mostly near their record peaks globally. There is no excuse for this behavior, arguably. There are three bearish indicators that ought to be scaring investors right now: The U.S. is imposing a trade tax on the entire planet; President Trump has threatened the independence of the Federal Reserve; and Goldman Sachs just moved down its forecast for U.S. GDP in the second half of the year (to 1.1%). But, as Goldman's Christian Mueller-Glissmann told clients in a recent note seen by Fortune, the markets appear to be ignoring this and enjoying a 'Goldilocks scenario' instead. 'Another week, another tariff salvo, and another market shrug,' Barclays analyst Christian Keller et al. told their clients. 'Resilient US consumer data and robust Q2 earnings for now dominate over initial signs of tariff effects on CPI, continuing threats of tariff escalations and increasing political pressures on the Fed.' There are reasons to worry that stocks might be overpriced. Deutsche Bank's Henry Allen pointed out recently that the Fed Funds futures speculators are betting in a way that suggests they expect an upcoming recession. 'If we look at Fed funds futures as of last night's close, we can see that just over 100bps of cuts are priced in over the next year to August 2026. That comes on top of 100bps already delivered between Sep-Dec 2024. So, if realised, that would be just over 200bps of cuts in two years. But historically, getting 200bps of cuts in two years has almost always required a recession,' he wrote in a research note. Maybe. It's worth remembering that the Fed Funds futures market changes daily, sometimes moving quite dramatically. These investors may not literally be pricing in a recession. But they are certainly betting that Fed Chair Jerome Powell will deliver cuts to interest rates sooner or later. More cheap money is good for stocks, and that's what stocks seem to be reflecting right now. Here's a snapshot of the action prior to the opening bell in New York: S&P 500 futures were off 0.13% this morning after the index hit a new high, at 6,305.60, up 0.14% yesterday. The S&P has never been above 6,300 before. The UK's FTSE 100 was clinging on above 9,000, at 9,008.61 in early trading. STOXX Europe 600 was down 0.44% in early trading. Japan's Nikkei 225 was down 0.11%. China's CSI 300 Index was up 0.8%. Bitcoin is still above $118K. This story was originally featured on
See - Sada Elbalad
5 hours ago
- Business
- See - Sada Elbalad
Silver Hits Record High as Egyptian Silver Pound Surges to EGP 496 for the First Time
Waleed Farouk Silver prices surged significantly on Wednesday, reaching their highest level since September 2011, driven by growing investment demand and improved market sentiment toward precious metals. Local Market Surge In Egypt, the price of 800 purity silver rose by EGP 1 to reach EGP 54 per gram. The 999 purity silver was priced at EGP 67, while the 925 purity silver was priced at EGP 62 per gram. Notably, the 925 silver pound jumped to a record EGP 496 — the highest in its history. Global Rally Globally, the price of silver rose by nearly $1 per ounce to reach $39.37, its highest level in more than 13 years. Since the start of 2025, silver has gained around 37%, making it one of the best-performing assets of the year, as investors seek protection against economic and geopolitical instability. Drivers Behind the Rally Several factors have contributed to silver's ongoing uptrend: Expectations of a Fed rate pause in the upcoming July meeting. Mounting concerns over a global economic slowdown are prompting investors to increase exposure to safe-haven assets. Ongoing supply chain disruptions and growing industrial demand, particularly from the solar energy and tech sectors, continue to support prices amid tightening global supply. Silver Outperforming Gold The silver-to-gold ratio — which measures the relative value of the two metals — fell to 87.16, down from 87.32 on Tuesday, indicating silver's relative outperformance. In Egypt's local market, silver has climbed 32% year-to-date, with 800 purity silver rising by EGP 13 from EGP 41 in January. Globally, the ounce has jumped from $29 to $39.73, delivering stronger returns than most other precious metals over the same period. Positive Outlook Ahead Silver's upward trajectory appears likely to continue, supported by several key developments: U.S. Treasury yields have declined, with the 10-year yield falling to 4.42% and the 2-year yield to 3.87%, increasing the appeal of non-yielding assets like precious metals. Citibank forecasts silver to reach $40 within the next 6 to 12 months and possibly surpass $46 by Q3 2025, driven by robust industrial demand and tightening supply. Silver remains undervalued relative to gold: with the current gold-to-silver ratio at 87.3, a reversion to the historical average of 53 could push silver prices to over $63 per ounce. Significant Upside Potential Historically adjusted data shows that silver's all-time high in 1980 would equal approximately $197 per ounce in today's dollars, while the 2011 rally peaked near $71. Current levels between $38–$39 are still relatively low — signaling considerable room for further appreciation in the near term. read more CBE: Deposits in Local Currency Hit EGP 5.25 Trillion Morocco Plans to Spend $1 Billion to Mitigate Drought Effect Gov't Approves Final Version of State Ownership Policy Document Egypt's Economy Expected to Grow 5% by the end of 2022/23- Minister Qatar Agrees to Supply Germany with LNG for 15 Years Business Oil Prices Descend amid Anticipation of Additional US Strategic Petroleum Reserves Business Suez Canal Records $704 Million, Historically Highest Monthly Revenue Business Egypt's Stock Exchange Earns EGP 4.9 Billion on Tuesday Business Wheat delivery season commences on April 15 News Israeli-Linked Hadassah Clinic in Moscow Treats Wounded Iranian IRGC Fighters Arts & Culture "Jurassic World Rebirth" Gets Streaming Date News China Launches Largest Ever Aircraft Carrier Videos & Features Tragedy Overshadows MC Alger Championship Celebration: One Fan Dead, 11 Injured After Stadium Fall Lifestyle Get to Know 2025 Eid Al Adha Prayer Times in Egypt Arts & Culture South Korean Actress Kang Seo-ha Dies at 31 after Cancer Battle Business Egyptian Pound Undervalued by 30%, Says Goldman Sachs Sports Get to Know 2025 WWE Evolution Results News "Tensions Escalate: Iran Probes Allegations of Indian Tech Collaboration with Israeli Intelligence" News Flights suspended at Port Sudan Airport after Drone Attacks
See - Sada Elbalad
5 hours ago
- Business
- See - Sada Elbalad
Gold Prices Decline Following U.S.-Japan Trade Deal and Treasury Yield Recovery
Waleed Farouk Gold prices witnessed a sharp drop in both local and international markets by mid-day trading on Wednesday, as a wave of profit-taking followed the yellow metal's climb to a five-week high. The improved risk appetite in global markets also weighed on precious metals, traditionally considered safe-haven assets. In Egypt, the price of 21-karat gold fell by EGP 30 to record EGP 4,680 per gram. Meanwhile, the international ounce price lost approximately $42, dropping to $3,390. The price of 24-karat gold reached EGP 5,349 per gram, while 18-karat gold recorded EGP 4,011. The price of the gold pound fell to EGP 37,440. Yesterday, prices had closed with local gains of EGP 25. The 21-karat gold started the day at EGP 4,685 and ended at EGP 4,710, while the ounce surged from $3,399 to $3,432. U.S.-Japan Trade Deal Lifts Market Sentiment Investor risk appetite rose significantly after the United States and Japan announced a historic trade agreement late Tuesday. U.S. President Donald Trump described it as 'the largest ever.' The deal includes a 15% tariff on Japanese car imports to the U.S. and the establishment of a $550 billion Japanese investment fund to be deployed within the United States. Global Markets: Stable Dollar, Lower Oil Prices At the same time, the U.S. dollar saw modest gains, and yields on 10-year Treasury bonds rebounded from a two-week low—raising the opportunity cost of holding non-yielding assets like gold. Meanwhile, U.S. Treasury Secretary Scott Bissonnette announced that negotiators from the U.S. and China would meet next week in Stockholm to discuss an extension of the deadline to reach a new trade agreement. This announcement added further optimism to markets and reduced demand for safe-haven assets. Fed Policy Uncertainty Lingers Despite the improved risk appetite, uncertainty surrounding the Federal Reserve's monetary policy continues to cast a shadow over global markets. President Trump intensified his pressure on the Fed, renewing his call for interest rate cuts and directly demanding the resignation of Fed Chair Jerome Powell. He also urged the Treasury Secretary to launch a comprehensive review of the Fed's policies—raising serious concerns over the institution's independence. Markets now turn their attention to the upcoming Federal Reserve policy meeting scheduled for July 29–30, with expectations leaning toward a rate hold amid a lack of clear signals for imminent changes in monetary direction. read more CBE: Deposits in Local Currency Hit EGP 5.25 Trillion Morocco Plans to Spend $1 Billion to Mitigate Drought Effect Gov't Approves Final Version of State Ownership Policy Document Egypt's Economy Expected to Grow 5% by the end of 2022/23- Minister Qatar Agrees to Supply Germany with LNG for 15 Years Business Oil Prices Descend amid Anticipation of Additional US Strategic Petroleum Reserves Business Suez Canal Records $704 Million, Historically Highest Monthly Revenue Business Egypt's Stock Exchange Earns EGP 4.9 Billion on Tuesday Business Wheat delivery season commences on April 15 News Israeli-Linked Hadassah Clinic in Moscow Treats Wounded Iranian IRGC Fighters Arts & Culture "Jurassic World Rebirth" Gets Streaming Date News China Launches Largest Ever Aircraft Carrier Videos & Features Tragedy Overshadows MC Alger Championship Celebration: One Fan Dead, 11 Injured After Stadium Fall Lifestyle Get to Know 2025 Eid Al Adha Prayer Times in Egypt Arts & Culture South Korean Actress Kang Seo-ha Dies at 31 after Cancer Battle Business Egyptian Pound Undervalued by 30%, Says Goldman Sachs Sports Get to Know 2025 WWE Evolution Results News "Tensions Escalate: Iran Probes Allegations of Indian Tech Collaboration with Israeli Intelligence" News Flights suspended at Port Sudan Airport after Drone Attacks
