Roubini Says Fed Won’t Step In Until Trump Makes the First Move
Nouriel Roubini, the economist best known for predicting the 2008 crash—and earning the nickname “Dr. Doom” in the process—has a message for traders: don’t count on the Fed to bail out the markets just yet.
The warning comes on the heels of President Donald Trump’s latest tariff blitz. Just last week, Trump slapped a new round of heavy tariffs on multiple countries, including a staggering 104% levy on Chinese imports. The market reaction was immediate and brutal. Tech stocks tanked, sending the Nasdaq 100 down 12%. Bitcoin nosedived 10%, briefly dipping below $75,000. And U.S. Treasury markets went haywire, with yields on longer-term bonds spiking as prices sank—raising alarm bells about a potential liquidity crunch, not unlike what we saw during the COVID-era panic in 2020.
With volatility surging, investors are betting big on a Fed rescue. Futures markets are now pricing in five rate cuts before year’s end. But Roubini says Fed Chair Jerome Powell isn’t ready to act—at least not yet.
“There’s a classic game of chicken underway,” Roubini told Bloomberg. “And Powell’s not going to flinch until Trump does.”
Translation? The Fed is holding its ground, waiting for the White House to soften its stance before stepping in with monetary support. According to Roubini, Powell knows the turmoil is policy-driven—and he won’t move unless the root cause (i.e., Trump’s tariff war) starts to unwind.
Markets, meanwhile, are hanging on every headline. Earlier this week, a bogus rumor about a temporary halt to the tariffs sparked a brief rally—only for hopes to be dashed once the news was debunked. It’s a sign of just how fragile sentiment has become.
Inflation Here to Stay, But No Recession in Sight
Roubini also weighed in on inflation, warning that the new trade landscape will likely keep prices elevated—especially in goods affected by tariffs. That’s a major headwind for long-duration bonds, which have taken a beating in recent days as yields surge.
Still, despite the market’s nervous energy, Roubini doesn’t believe a recession is imminent. While some betting markets suggest better-than-even odds of two straight quarters of economic contraction, he remains in the “soft landing” camp—for now.
