Traders work on the floor of the New York Stock Exchange.
NYSE
Wall Street veteran Art Cashin told CNBC on Thursday that investors continue to worry about the Federal Reserve’s control of the bond market, leading to hectic trading.
“It doesn’t matter whether they have lost control or not. If the market believes they have lost control, it is just as dangerous and damning,” said Cashin, UBS’s director of operations, in “Squawk on the Street”.
Cashin’s comments were made before Fed Chairman Jerome Powell appeared at The Wall Street Journal Jobs Summit around noon on Thursday.
“I don’t think he can have a magic wand,” said Cashin, but he stressed that investors want Powell’s assurances that the Fed will be able to “maintain control” of bond yields and inflation expectations.
In fact, US stock indexes fell on Thursday afternoon, with yields rising during Powell’s interview. The movement in yields came after Powell did not give a strong indication that the central bank would change its asset purchases.
Cashin mentioned before Powell’s appearance that the Fed chairman may be able to allay brokers’ concerns if he discusses a possible “Operation Twist”, in which he sells short-term bonds and buys long-term bonds.