Asia stocks shaky before Fed chief's speech as growth woes weigh

Saturday, 24 Aug, 2019

President Donald Trump has lashed out at the Federal Reserve chairman, after Jay Powell refused to cut interest rates to Trump's liking, a move that would have given the president ammunition to escalate his trade war with China.

Trump, however, was enraged by Powell's speech, saying he wasn't sure who was the bigger enemy, the USA central bank chief or Chinese leader Xi Jinping. "Despite this the Fake News Media, together with their Partner, the Democrat Party, are working overtime to convince people that we are in, or will soon be going into, a Recession", Trump tweeted Friday before Powell spoke and China's tariffs were announced.

Powell's remarks on Friday morning at the annual Fed economic symposium in Jackson Hole, Wyoming, gave few indications that the central bank will cut interest rates at its next meeting.

"At this point, if the economy continues where it is, I would probably say we should keep things the way they are", Mester told CNBC. "We will act as appropriate to sustain the expansion", he said.

U.S. Treasury yields inched lower, with 10-year notes US10YT=RR last up 22/32 in price to yield 1.5351%, from 1.61% late on Thursday.

Wall Street extended modest opening opening losses throughout the NY morning, taking stocks "decisively lower", said analysts at Charles Schwab, "with the threat of new tariffs on $75 billion of United States goods by China causing trade fears to ramp up".

The Fed released the minutes of last month's meeting on Wednesday.

"We are carefully watching developments as we assess their implications for the USA outlook and the path of monetary policy", he said.

The stock market entered a devastating free-fall after President Trump fired out a barrage of tweets today aimed at China and Fed Chairman Jerome Powell. -China trade war, slowing global growth and muted inflation.

Powell described the rate reduction at the time as "a mid-cycle adjustment to policy, " telling reporters on July 31 that it wasn't the beginning of a long series of cuts.

Traders assessed reports showing labor-market strength and US factory activity contraction.

Policymakers were already divided over whether to head off economic fears with significant further rate cuts or to stand pat because people are still finding jobs, taking home fatter paychecks and spending money.

Renewed U.S. -China trade tensions and pressure from the White House complicate the Fed's job going into its September 17-18 rate-setting meeting.

Trump indicated he was planning to take an action that would affect the dollar and the Fed, but it was unclear what that would be.

George said she saw some areas of strength, including very low unemployment and inflation now closer to the Fed's target level.