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The yield on the benchmark 10-year Treasury note broke below the 2-year rate early Wednesday, an odd bond market phenomenon that has been a reliable, albeit early, indicator for economic recessions. The yield on U.S. 30-year bond fell to an all-time low, dropping past its prior record notched in summer 2016.

The moves show increasing worries about the global economy as investors rush into safe havens.

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He'll take credit for any upward swings and blame someone else when it goes down.

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As bond markets flashed concern about recession on Wednesday and major stock indices cratered, Trump put the blame squarely on the Fed for continuing to raise rates through the end of last year. Even Trump foe and New York Times economics columnist Paul Krugman dinged the Fed for “a clear mistake.”

In raising interest rates four times last year “the Federal Reserve acted far too quickly, and now is very, very late,” in reversing itself and cutting borrowing costs only modestly so far, Trump tweeted. “Too bad, so much to gain on the upside!”

Earlier on Wednesday, White House trade adviser Peter Navarro told Fox Business Network the U.S. central bank should cut rates by half a percentage point “as soon as possible,” an action he claimed would lead “to 30,000 on the Dow.”

A cut of that magnitude would typically be associated with serious economic risk, not an economy with record low unemployment and ongoing growth.

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It was perhaps the most dramatic bit of evidence yet of just how the landscape for the Fed has changed over the past few months, from one that Powell deemed “remarkably positive” as of last October, to one of rising risks for the United States’ record-setting, decade-long expansion.

As of last fall, the Fed thought the economy, fueled by the Trump administration’s massive $1.5 trillion tax cut package and spending plans, would grow strongly enough to justify steadily higher rates.

At that point the threat of a recession seemed distant unless some sort of outside event intervened to throw the economy off course - something like the collapse of the dot-com stock market bubble ahead of the brief 2001 recession, or the implosion of the U.S. housing and credit markets ahead of the more serious 2007-2009 Great Recession.

Yet, as Trump’s trade rhetoric and his imposition of tariffs on trading partners ratcheted up this year, particularly since May, investors have acted as if a breaking point had been reached.

Global trade flows have dropped. Economic growth in Germany, a bellwether economy of sorts given its reliance on exports, contracted in the second quarter. Data also showed industrial output in China fell to more than a 17-year-low in July. Indices of uncertainty also have spiked.

If Fed policy suddenly seemed out of step, it was perhaps inevitable given the difficulty of keeping up with Trump’s whipsaw approach to trade policy, and the growing sense that the fallout may be deeper and longer lasting than expected.

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Originally posted by Cindysphinx:
: clang :

That was the sound of my wallet slamming shut.