Trump/Powell: The Two Poles Of Policymaking

2025-05-26 13:45:00 ET

Summary

• Futures markets suggest we’ll get just one rate cut from the Fed this year. US consumer and producer price inflation data has been relatively cool, and Fed Chair Powell has been sounding hawkish.
• Nonetheless, President Trump still thinks the Fed should "lower rates like Europe and China have done."
• Whereas Powell’s leadership style is designed to minimize the cost of capital, Trump’s style seems to raise it, in the form of higher stock market volatility, wider credit spreads, climbing Treasury yields and a ratings agency downgrade.
• In our view, investors should take care not to mistake the chaos of the past 125 days as a lack of strategy.

By Brad Tank, Co-Chief Investment Officer and Global Head of Fixed Income

The Fed’s processes are designed to minimize the cost of capital while the president’s tactics seem to be raising it - who’s right and who’s wrong? ...

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