President Trump criticized the Fed
In an interview with CNBC on July 19, President Trump said that he wasn’t “thrilled” about the Fed raising the rates. He said, “Because we go up and every time you go up they want to raise rates again. I don’t really — I am not happy about it. But at the same time I’m letting them do what they feel is best.” Usually, presidents don’t interfere or comment on the Fed’s decisions. The market knows President Trump’s views on interest rates.
In reaction to President Trump’s comments, the US dollar (UUP) and Treasury yields (TLT) (GOVT) fell. The US dollar was at a new one-year high on July 19. The US dollar has been rising this week due to Fed Chair Jerome Powell’s strong assessment of the US economy (VTI) supporting the Fed’s rate hike path.
Gold didn’t catch a bid
President Trump doesn’t support the strong dollar. In the past, he has talked down the dollar. While the dollar was down slightly after President Trump’s comments, gold (GLD) (SGOL) didn’t gain much. The markets give a knee-jerk reaction to President Trump’s comments and tweets. The markets quickly got back to business as usual. Market participants don’t think that the losses to the dollar and other assets will stick following President Trump’s comments.