Traders work on the floor of the New York Stock Exchange.
NYSE
Wall Street veteran Art Cashin told CNBC on Thursday that investors remain concerned about the Federal Reserve’s hold on the bond market, leading to choppy trading.
“It doesn’t matter whether they’ve lost control or not. If the market thinks they’ve lost control, it’s just as dangerous and devastating,” Cashin, UBS’s director of floor operations, said of “Squawk on the Street . “
Cashin’s comments came before Fed Chairman Jerome Powell appeared at The Wall Street Journal Jobs Summit around noon Thursday.
“I don’t think he can have a magic wand,” Cashin said, but he stressed that investors wanted assurance from Powell that the Fed would be able to “control” bond yields and inflation expectations.
Indeed, US stock indexes fell Thursday afternoon as interest rates rose during Powell’s interview. The interest rate move came after Powell failed to provide a strong indication that the central bank would change its asset purchases.
Cashin said before Powell’s appearance that the Fed chairman might be able to allay traders’ concerns if he discussed a possible “Operation Twist” in which it sells short-term bills and buys long-term bonds.