Kudlow: Fed's T-bill purchases are “basically” QE

Kudlow says that the Fed should cut interest rates and that he Fed's T-bill purchases are "basically" QE.
The dots indicate the Fed's neutral bias and the US dollar is consolidated in the main, although US yields are pressured.

Ross J Burland FXStreet

Larry Kudlow, Director of the National Economic Council and President Donald Trump's top economic adviser is at the forum of World Economic Forum on Tuesday, a gathering of government and business leaders is held in snowy Davos, Switzerland. Kudlow has previously voiced strong opinions on the Federal Reserve.

While US President Donald Trump praised the negative rates assigned to bonds in other countries during a speech Tuesday at the World Economic Forum in Davos, Kudlow, offered a different view. Kudlow says that sub-zero yields and aggressive central bank practices are “ineffectual,” arguing that they are no substitute for pro-growth fiscal policy.

“Negative interest rates struck me as ineffectual,” Kudlow said during an interview with CNBC. “All this negative rates and printing money doesn’t really work, does it?”

“There’s nothing wrong with a balance sheet rising,” he said. “But where are the tax cuts? Where are the incentives for people to work the extra hour take the extra incentive and take the extra risk?”

Additional comments

Exports to China will be a huge growth factor for the US.
Its not fair to say that expectations are lower for phase-2.
Market opening is the key to Europe trade talks.
Tax cuts will not be in the budget proposal.

FX implications

There is a keen focus on the Fed this year. The dots indicate the Fed's neutral bias and the US dollar is consolidated in the main, although the recent COT report shows a bias to the downside for the DXY. US 10-year yields are extending the December downward trajectory, almost at the lowest pint since the trend began, 1.763%.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

AUD/USD eyes 0.7150 barrier nine-day EMA

AUD/USD inches higher after registering modest losses in the previous day, trading around 0.7130 during the Asian hours. The technical analysis of the daily chart indicates that the pair is moving sideways within the rectangle pattern, suggesting a consolidation as neither the bulls nor the bears have enough momentum to take control of the market.

USD/JPY trades below 160.00 intervention threshold; bullish bias intact

The USD/JPY pair attracts some sellers during the Asian session amid fears that authorities will step in again to prop up the Japanese Yen. Furthermore, the Israel-Lebanon truce prompts some profit-taking around the US Dollar and exerts downward pressure on the currency pair.

Gold puts its 200-day SMA to the test near $4,420

Gold keeps the bullish stance in place in the latter part of Thursday’s session, although a convincing break above the key $4,500 mark per troy ounce still remains elusive. The precious metal’s advance comes amid the resurgence of some selling interest around the Greenback, improving risk sentiment, and declining US Treasury yields across the board.

Bitcoin’s massive storm is back: Why the sell-off is far from over

Bitcoin price action over the last few weeks has felt less like a normal, healthy correction and more like a slow grinding crash that continues to wreak havoc on holdings and trading accounts. And everything suggests that the dramatic crash isn’t over.

Nonfarm payrolls: Testing the limits of Fed policy patience

The upcoming nonfarm payrolls report for May will provide the final update on the US labor market before Kevin Warsh attends his first policy meeting as the new Fed Chair later this month.

Recession on paper: What really moves the Canadian Loonie now?

Statistics Canada handed the headline writers a gift and the analysts a headache. Real GDP shrank 0.1% on an annualized basis in the first quarter, and with the fourth quarter of 2025 revised down to a 1.0% contraction, that is two negative quarters in a row, the textbook definition of a technical recession and Canada's first since the pandemic.