Traders work on the floor of the New York Stock Exchange.
NYSE
Wall Street veteran Art Cashin told CNBC on Thursday that investors are still worried about the Federal Reserve maintaining the bond market, leading to bad trading.
“It does not matter if they have lost control or not. If the market believes they have lost control, it is just as dangerous and damning,” Cashin, the director of UBS, said, “Squawk on the Street.”
Cashin’s comments come before Fed Chairman Jerome Powell appears at The Wall Street Journal Jobs Summit on Thursday afternoon.
“I don’t think he can have a magic wand,” Cashin said, but he emphasized that investors wanted Powell’s assurance that the Fed would be able to ‘keep control’ of yields and inflation expectations.
Indeed, US stock indices fell Thursday afternoon as yields rose during Powell’s interview. The yield shift comes after Powell did not give a strong hint that the central bank would change its asset purchases.
Cashin mentioned before Powell’s appearance that the Fed chairman could overcome traders’ concerns if he discussed a potential “Twist” operation, in which he sells short-term accounts and buys longer-term bonds.