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Trump requires the Fed to reduce interest rates to zero & # 39; or less & # 39;



President Donald Trump on Wednesday called for the Federal Reserve to construct interest rates at zero "or less," in a new call for negative returns that he believes will help the U.S. curb borrowing costs and stimulate growth.

Via Twitter, the president continued his campaign to sweep the Fed's monetary policy. With the world economy plagued by the drawbacks of US-China trade power, Trump called the central bank "leg heads" to miss "a once-in-a-lifetime opportunity" presented by historically low returns.

Trump reiterated his frustration over Fed Chairman Jerome Powell, who he believes has not been aggressive enough to facilitate monetary policy in the face of a global downturn.

Negative return on global debt, currently estimated at $ 16 trillion, is bad for savers and bank revenues, but makes the risk of default almost zero.

It also underlined the president's growing fascination for negative interest rates, a condition in which investors have sacrificed returns on security by paying the bond issuer.

"Especially as a commodity while Trump is focused on bilateral trade balances and US exports … which he seems to think frustrated about improving the economy," said Marc Chandler, chief marketing strategist at Bannockburn Global Forex.

As the return on the collateral ocean in government debt collapses globally – mainly due to fears over the economy and expected relief from the central bank – borrowing costs have fallen sharply.

<p class = "canvas atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8 em) – sm" type = "text" content = "Actually, the Congressional Budget Office said last month, that the federal government's savings in loan costs & nbsp; translated into a $ 1.1 trillion reduction & nbsp; in CBO's estimates for the next ten years, even as consumption deficits increase. "data-reactid = "24"> In fact, last month, the Congressional Budget Office said the federal government's savings on loan costs translate into a $ 1.1 trillion reduction in CBO's estimates over the next ten years, even as a deficit on consumption. 19659009] Ownership of various government bonds globally "class =" JsEnabled_Op (0) JsEnabled_Bg (n) Trsdu (.42s) Bgr (no) Bgz (cv) StretchedBox W (100%) H (100%) ie-7_H (a) " itemprop = "url" style = "background-image: url (https://s.yimg.com/ny/api/res/1.2/tG4Zd1GkvLOeyL9Gzh4KjQ–~A/YXBwaWQ9aGlnaGxhbmRlcjtzbT0xO3c9Njk5O2gpsNmedw ue1.s3.amazonaws.com/creatr-uploaded-images/2019-09/c1814d10-d48b-11e9-be7d-6e40ea8c6cf2); "src =" https://s.yimg.com/g/images/spaceball.gif "data-reactid =" 29 "/>

The ownership of various government bonds globally

The Bank of America-Merrill Lynch (BofA) recently noted that" the presence of negative rates have largely been a function of expected economic weakness. Markets have gone into risk-off mode and pushed [major economies’] interest rates steadily lower as investors flow to safe-haven assets. "

The bank added that "giant the bottom line is that … returns continue to run to the bottom and inflate a bubble market bubble that poses another risk to the global economy. "

With low inflation, the European Central Bank, the Swiss National Bank and the Bank of Japan have all pledged to keep interest rates negative – a policy Trump believes the Fed should replicate domestically.

A handful of experts believe negative prices serve a function, at least in the short term.

Krishna Memani, Invesco's Deputy Head of Investment, wrote last week that "at the end of the day, the central bank's goal is to focus on growth and employment, and not to ensure that there is enough high-return capital in the economy to meet a certain Threshold requirements. "

is generated without underlying economic growth," Memani said. This argument is in line with Trump's emphasis that the Fed needs to do more to boost growth.

"If you hit the argument along these lines, you can see why in low-demand environments low and even negative returns may be needed to support growth. There is nothing magically different about negative nominal yields," Memani added to.

<p class = "canvas-atom canvas text Mb (1.0 em) Mb (0) – sm Mt (0.8 em) – sm" type = "text" content = "However, others have analysts warned that return below zero is a & nbsp; trap that will be difficult to escape when growth and inflation return. "Data-reactid =" 53 "> However, other analysts have warned that the return below zero is a trap that will be difficult to escape when growth and inflation returns.

"As long as banks do not pass negative interest rates on retailers, negative key rates will weigh on profitability," BofA's analysts said. "The more negative policy rates, the greater the obstacle banks have to generate a positive net interest margin."

<p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8 em) – sm" type = "text" content = "Amid negative negative prices, warned former Fed chairman Alan Greenspan said it was & nbsp; "just a matter of time" & nbsp; before the US saw them too. "data-reactid =" 59 "> In the midst of great prices, it warned Former Fed Chairman Alan Greenspan said it was only a matter of time before the US saw them too.

<p class = "canvas atom canvas text Mb (1.0 em) Mb (0) – sm Mt (0.8 em) – sm" type = "text" content = "Return on the US 10 benchmark index -Year Treasury ( ^ TNX ) is chasing near record lows below 2% and is expected to fall further. "data-reactid =" 60 "> Yield on benchmark US 10-year Treasury (^ TNX) benchmark is captured close to a record low of 2%, and is expected to fall further.

<p class = "canvas-atom canvas -text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " Javier David is editor of Yahoo Follow Javier on Twitter: [19659049] @TeflonGeek "data-reactid =" 61 "> Javier David is the editor of Yahoo Finance. Follow Javier on Twitter: @TeflonGeek

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – -sm "type =" text "content =" Read more: "data-reactid =" 62 "> Read more:

<p class =" canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" & # 39; The outlook has darkened & # 39 ;: JPMorgan predicts 3 more interest rate cuts data-reactid = "63"> & # 39; Prospects have darkened & # 39 ;: JPMorgan predicts 3 more cuts

<p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" Trump tweets and market volatility have a & # 39; statistically significant & # 39; ratio, BofA finds "data-reactid =" 64 "> Trump tweets and market volatility have a & # 39; statistically significant & # 39; relationship, find BofA

<p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " Trump Rips the Fed's Powell, Demand's Companies Seek & # 39; Alternatives & # 39; to China "data-reactid =" 65 "Trump Rips the Fed's Powell, Requires Companies to Seek & # 39; 39; options & # 39; to China

<p class = "canvas atomic canvas text Mb (1.0 em) Mb (0) – sm Mt (0.8 em) – sm" type = "text" content = " China could unload US Treasuries – but here's why they (probably) won't "data -reactid =" 66 "> China could empty US Treasuries – but here's why they (probably) won't

< p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " Read the latest financial and business news from Yahoo Finance "data-reactid =" 67 "> Read the latest financial and business news from Yahoo Finance

<p class =" canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" Follow Yahoo Finance on Twitter [19659021] Facebook Instagram [19659024] Flipboard SmartNews LinkedIn YouTube and reddit . "data-reactid =" 68 "> Follow Yahoo Finance on Twitter Facebook Instagram [19659049] Flipboard SmartNews LinkedIn [19659049] YouTube and reddit [19459052[] 19659042]


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