The FOMC decision is set for tomorrow at 2 PM ET

As the FOMC today meeting gets underway today, with the decision due at 2 PM ET/1900 GMT tomorrow, Pres. Trump is adding his two cents into the discussion.

He says:

  • The Fed should get smart and lower the rate to make our interest competitive with other countries
  • If Fed lowers interest rates, we would then focus on paying off and refinancing the US debt

Of course the Fed only controls the shorter-term overnight interest rate target. Longer term interest rates have the shorter-term interest rates as a function, but it is not the "end all be all" for the shape of the yield curve. The market determines the yield curve shape. In fact, rates could increase further out the curve and increase treasury borrowing obligations should traders feel the economy is too hot.

The US treasury is exploring issuing bonds with maturities of 50 years to help Washington look for cheaper and longer-term ways to finance its burgeoning debt load.

Speaking of auctions, the US treasury will complete their longer-term auction cycle today by auctioning off 7 year notes at 1 PM ET/1800 GMT. Yesterday the treasury doubled up by auctioning off 2 and 5 year notes. The US treasury has stopped auctioning off longer-term notes on the day of a Federal Reserve interest rate decision. Hence the double up yesterday.