TLDR
- Trump administration allegedly creating market uncertainty to force interest rate cuts
- Pompliano suggests this strategy aims to avoid refinancing $7T in debt at high rates
- 10-year Treasury yield has already dropped from 4.8% in January to 4.21%
- Markets have declined significantly with S&P 500 down 7.32% and Bitcoin down 27.4% from ATH
- Lower interest rates would benefit both government refinancing and consumer borrowing
Recent market turbulence might be part of a planned strategy by the Trump administration to pressure the Federal Reserve into lowering interest rates, according to Bitcoin commentator Anthony Pompliano. The move could help the U.S. avoid refinancing trillions in debt at higher rates while stimulating economic growth.
President Donald Trump and Treasury Secretary Scott Bessent appear to be “taking matters into their own hands” by creating market uncertainty, Pompliano claimed in a March 10 social media post. This approach comes after Federal Reserve Chair Jerome Powell refused to lower interest rates from the current target range of 4.25% to 4.5% despite Trump’s calls to do so in late January.
The strategy centers around creating market weakness through policy uncertainty. Pompliano points to Trump’s tariff announcements as deliberately designed to spook markets.
When investors become nervous about stocks, they often buy bonds instead. This increased demand for bonds pushes their yields down.
The apparent goal is already showing results. The 10-year Treasury yield has fallen from nearly 4.8% in January to 4.21% currently. This matters because the U.S. government needs to refinance around $7 trillion in debt over the next few months.
Lower yields would mean the government pays less interest on this debt. This could save billions in interest payments over time.
The market impact has been clear. Broad market indexes have suffered major losses recently. The S&P 500 fell 2.66% on March 10 alone and is down 7.32% over the past month.
The Nasdaq has fared even worse, dropping 3.8% on March 10 and 10.7% over the month. Cryptocurrency markets have been hit hardest, with Bitcoin down 27.4% from its all-time high of $108,786.
Over $1.2 trillion wiped from cryptocurrency market
Over $1.2 trillion has been wiped from cryptocurrency market capitalization since December 17, according to data cited by Pompliano. These sharp declines across markets may be exactly what the administration wants to see in the short term.
“This is not your grandfather’s economy. And this is not your grandfather’s economic policy,” Pompliano noted in his analysis. The approach represents a bold and controversial strategy that breaks from traditional economic management.
During a Fox News interview on March 9, Trump hinted at his focus on interest rates, saying: “Nobody ever gets rich when the interest rates are high because people can’t borrow money.” This statement aligns with the theory that the administration is pushing for lower borrowing costs.
Trump reportedly told viewers “you can’t watch the stock market right now,” suggesting he’s prepared for short-term market pain to achieve longer-term economic goals. Lower interest rates would benefit not only government refinancing but also everyday Americans.
Reduced rates make mortgages, auto loans, and other consumer debt more affordable. This increases disposable income and can stimulate economic activity through increased spending.
The housing market would likely see more activity as mortgage rates decline. As Kris Patel observed, “as interest rates decline, more buyers will emerge, but so will many sellers. We need the housing market to thaw.”
Increasing expectations for interest rate cuts
Prediction markets currently show increasing expectations for interest rate cuts this year. Kalshi, a prediction market platform, now gives greater than 75% odds of two or more rate cuts in 2025.
The same platform shows a 38% chance of recession this year. This creates a high-stakes scenario that Pompliano describes as a “who blinks first” contest between Trump and Powell.
The CME FedWatch tool, which measures expectations for Federal Reserve interest rate changes, currently shows a 96% probability that the target rate will remain unchanged at the next Fed meeting on March 19. However, it indicates nearly 50-50 odds for a rate cut at the following meeting on May 7.
The Federal Reserve typically avoids lowering interest rates during periods of high inflation. However, if market declines continue or worsen, what some are calling a “Trumpcession” might force the Fed’s hand.
“If we end up with lower interest rates and can somehow avoid a recession, then we will all have to tip our cap to the current leadership team,” Pompliano concluded. “Millions of Americans are depending on it.”
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