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Trump, Not The Fed, Is What Moves Markets Now

Brett Wander, Chief Investment Officer of Fixed Income at Charles Schwab Investment Management, today breaks down the recent Fed meeting from a unique angle, making the case that the Federal Reserve is actually no longer relevant.

Wasn’t there a Fed meeting recently?

Yes, but hardly anyone seemed to notice.

Does the Fed matter anymore?

In the short run, not so much. The Fed met last week and hardly anyone’s taking about it. Yet again last week, Trump dominated the headlines. True, the Fed wasn’t expected to change its rate policy. But usually, Fed statements convey insights regarding future rate policy—and often generate market volatility. But currently, Janet just can’t seem to compete with Donald.

How about the jobs report?

Typically, the monthly jobs report is the single most important piece of economic data we can get. And when the number is released, stocks, bonds, and currencies usually start moving. Last Friday, the Labor Department announced that 227,000 new jobs had been created. Not bad. But in the current environment, economic data can’t seem to compete with Donald.

Is everything Trump says moving the markets?

Sure seems like it. Unquestionably, what Trump does, says, and tweets seems to affect the financial markets. When he’s taking about reducing taxes and regulation, or talking about increasing fiscal spending, equities and bond yields tend to rise. When he’s talking immigration and trade, it’s often the opposite result. So the only thing that seems to compete with Donald is … Donald.

The iShares Barclays 20+ Yr Treas.Bond ETF (NASDAQ:TLT) was trading at $120.68 per share on Tuesday afternoon, up $0.96 (+0.80%). Year-to-date, TLT has gained 1.30%, versus a 2.45% rise in the benchmark S&P 500 index during the same period.

TLT currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #18 of 27 ETFs in the Government Bonds ETFs category.

This article is brought to you courtesy of Charles Schwab Investment Management.

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