DoubleLines Gundlach: Rates a big part of sell-off


Asian markets plunged on Thursday morning following the worst session on Wall Street for months, as US President Donald Trump said the Federal Reserve had "gone crazy" with plans for higher interest rates.

Mnuchin, speaking to reporters on the sidelines of the International Monetary Fund and World Bank annual meetings in Bali, also said that Chinese officials had told him that they did not want to see a further depreciation of the yuan's exchange rate, an issue that the United States has been very concerned about. "I think the Fed is out of control", Trump told reporters in the Oval Office. 'I think the Fed is out of control'.

US central bankers have raised the benchmark lending rate three times this year, and investors see more than 70 percent probability of another hike in December.

The US central bank once again is on the firing line following President Donald Trump's unprecedented attacks but is likely to shrug it off and focus on economic data.

Its Trump's own appointee, Federal Reserve chairman Jerome H. Powell, who is backing the move toward higher rates. "I think I know about it", he said.

"I don't like it", Trump said Tuesday at the White House, referring to the Fed's rate hikes, the most recent of which was September 26.

White House economic adviser Larry Kudlow sought to downplay Trump's comments about the Fed.

Mr Trump's comments follow several days of declines in U.S. stock markets.

One of the reasons for the meltdown in US equities is uncertainty about hiking the US Federal Reserve rates.

He said the Federal Reserve was being "too aggressive" by raising interest rates this year and getting "a little bit too cute".

The steep drop in Asia followed Wednesday's plunge in NY, with the Dow Jones dropping almost 830 points - the biggest fall since February - after Trump's latest criticism of the Federal Reserve. They are raising interest rates and it's ridiculous. Low interest rates fueled a housing boom until 2005, when the agency began a policy of rate increases to temper growth in an overheated economy.

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Those zones were all but destroyed by liquefaction, a phenomenon where the brute force of a quake turns soil to quicksand. Longki Djanggola said the disaster relief period, due to expire on Saturday, was extended by two weeks to October 26.

Raising interest rates was justified 'for those economies that are showing much improved growth, inflation that is picking up.unemployment that is extremely low, ' Lagarde told a press briefing in Bali, Indonesia where the International Monetary Fund is holding its annual meeting.

In fact, "interest rates are very low given how strong the economy is, given where inflation is and given where unemployment is", Mr Wessel said. Trump owes more than $300 million to Deutsche Bank AG of debt with interest rates that rise or fall depending on Fed policy.

Can Fed Policy Cause Sudden Stock Market Crashes?

He added later, "The problem, in my opinion, is Treasury's and the Fed".

The International Monetary Fund this week downgraded its forecastof USA growth, which it now predicts will be 2.5 percent next year.

But for all the stock market palpitations and risks to particular interest-rate sensitive industries, the message to take from the recent rise in interest rates is an unambiguously good one: This expansion may have some life in it yet.

Although the drop was unusually large, the stock market has been on a historic run of gain since the president's inauguration.

Meanwhile, yields in Europe remain suppressed: the European Central Bank is planning to stop its bond-buying program by the end of this year, but it's not going to start unwinding its $3.8-trillion bond holdings anytime soon.

Trump has said he likes low interest rates, in part because of his background in real estate.

If investors are on edge now because of this week's declines, they will be really rattled if the Fed lost its independence.