Powell’s Dovish Turn Calms Markets, but Trump’s China Remarks Stir New Uncertainty

Hadisur Rahman, JadeTimes Staff

H. Rahman is a Jadetimes news reporter covering Business

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Image Source: Hannah Beier/Bloomberg

Federal Reserve Chair Jerome Powell struck a noticeably dovish tone on monetary policy yesterday, signaling the central bank’s readiness to support the U.S. economy amid a cooling labor market. Speaking at the National Association for Business Economics meeting in Philadelphia, Powell highlighted slower payroll growth and rising employment risks, even as longer-term inflation expectations remain near the Fed’s 2% target.

His remarks reassured investors that another interest rate cut could be on the way, with futures markets placing the odds of a 25-basis-point reduction this month at 96%, according to CME’s FedWatch tool. Powell emphasized that policy decisions will “depend on the evolution of the economic outlook and balance of risks,” suggesting flexibility in response to shifting conditions.

However, the optimism was short-lived. Late in the evening, President Donald Trump reignited trade tensions by accusing China of “economic hostility” over reduced soybean purchases. In a post on Truth Social, Trump warned of potential new restrictions on Chinese trade, rattling global markets once again.

Following Powell’s speech, the S&P 500 briefly rebounded from early losses before closing down 0.16%. Futures turned higher overnight, though volatility indicators such as the VIX index spiked 3% amid renewed geopolitical uncertainty.

Analysts said Powell’s willingness to “look through” short-term inflation pressures largely driven by tariffs offered reassurance that the Fed would not over-tighten policy. Still, Trump’s latest remarks risk undermining those gains, with investors once again caught between dovish central bank signals and unpredictable trade headlines.

As of this morning, S&P 500 futures were up 0.6%, Dow Jones gained 0.4%, and European markets edged higher, while traders brace for further developments from Washington and Beijing.