Trump Publicly Pressures Monetary Policy, Draws Market Attention
On the brink of the Federal Reserve's year-end interest rate decision, U.S. President Trump's latest remarks have sent shockwaves through Wall Street. In a media interview, he explicitly stated that "support for a significant immediate rate cut" will be a core criterion for selecting the next Federal Reserve chairman. This rare public intervention has sparked widespread discussion and is believed to potentially intensify policy tensions between the administration and the Federal Reserve.
Commentary suggests that Trump's remarks have broken the tradition of presidents maintaining a distance from monetary policy, prompting the market to reassess the policy trajectory in the coming months. With high interest rates continuing to suppress the economy and markets, the president's "inclination for easing" has added uncertainty to policy outlooks and heightened investor concerns over the independence of the Federal Reserve.
Currently, Federal Reserve Chairman Powell's term is set to end in May next year, with Kevin Hassett, a key economic figure in the White House, emerging as a popular contender. He has also hinted that if economic data permits, further rate cuts could exceed the conventional 25 basis points.
Significant Volatility in U.S. Stocks as JPMorgan's Plunge Drags Major Indices
On the eve of the interest rate decision, U.S. stocks remained cautious. The three major indices showed mixed results at Monday's close, with the Dow Jones turning from gains to losses, the S&P 500 weakening slightly, and the NASDAQ marginally rising.
The most notable market event came from JPMorgan, whose stock plummeted intraday and eventually closed over 4% lower, marking its largest single-day drop in months. The sell-off was triggered by signals from company management regarding cost expectations—operating expenses for 2026 are anticipated to significantly exceed market forecasts. This has raised investor concerns that profit margins for large banks may be under pressure, weighing on the financial sector as a whole.
Meanwhile, the precious metals sector emerged as a market highlight. Silver prices soared to a historical high, driving a robust rebound in related company stocks, becoming one of the few supportive forces in a turbulent market.
Chinese stocks overall performed weakly, with technology and automotive sectors generally declining, reflecting the greater pressure on growth assets amidst a weakening global risk appetite.
Federal Reserve Meeting Becomes Central Market Focus
As the Federal Reserve enters its final rate-setting meeting of the year, the market's expectation for another 25 basis point rate cut has all but solidified. According to the CME's "FedWatch" tool, the probability of a rate cut this week is nearly 90%. However, the policy statement may maintain a cautious tone, seen as an important signal to curb excessive market easing expectations.
Some analysts believe that although a rate cut may boost the stock market, if the Federal Reserve indicates limited room for future easing, the dollar and yields could remain relatively strong, thereby suppressing the upward momentum of risk assets.
Policy Uncertainty Intensifies, and Short-Term Market Volatility May Increase
Overall, the interplay of political signals and the Federal Reserve's decision has made interpreting the future policy direction more complex. Trump's latest statement has increased the unpredictability of monetary policy, and how the Federal Reserve will balance risks in the face of inflationary pressure and signs of economic slowdown becomes crucial.
As the interest rate decision approaches, market sentiment may continue to lean towards caution, with short-term volatility likely to remain elevated.
