A Fed rate cut is now at the center of a fast-moving standoff between the White House and the central bank. President Trump said Friday that trade with roughly half of America's partners could stop entirely if the Federal Reserve refuses to lower rates at its September 15–16 meeting.
Source: The Kobeissi Letter
The threat landed hours after a stronger-than-expected August jobs report, one that now has traders leaning the opposite way.
Employers added 162,000 jobs in August, far above forecasts. Normally, a number that strong usually argues against a rate cut, since it signals the economy does not need extra support. Trump read the report differently.
In a Truth Social post, he said a stronger economy deserves the lowest borrowing costs of any nation, calling high rates an unfair burden on the country's finances.
He went further, warning that without a lower levy, trade with countries where the US runs a deficit could simply stop. That list includes major partners including China, Mexico, Canada, Germany, Japan, South Korea, India, and Taiwan.
Trump pointed to a recent Supreme Court tariff ruling as the legal basis for such a move, calling it "better than tariffs."
Economists estimate more than $300 billion in monthly trade volume runs through the countries named. Halting that flow would dwarf any tariff plan rolled out so far. It would also test how far a president can push a central bank that, by design, sets policy independent of the White House.
Inside the Federal Reserve, the picture is far from the President’s view.
Fed Chairman Kevin Warsh struck a hawkish tone at Jackson Hole, saying policymakers need clear proof inflation is cooling before easing up. That language markets read as an opening for a hike.
On the other side, Governor Christopher Waller said this week he would support holding rates steady at the September 15-16 meeting if upcoming inflation data keeps showing improvement. He added that a single hike right now would not bring inflation down to target anyway.
With three higher authorities split over the path for September interest rates, the FOMC meeting 2026 is shaping up as a difficult decision, with a rate cut or hike close to a toss-up.
Interest rates move gold and digital assets in opposite directions depending on which way the Fed goes, since both are non-yielding assets that compete with cash and bonds for demand.
Borrowing costs rise, often strengthening the dollar
Gold typically comes under pressure as real yields climb
Bitcoin and other crypto assets tend to face selling pressure as risk appetite cools
Liquidations often spike, as already seen with over $387 million wiped out across derivatives desks in the past 24 hours
Cheaper money usually weakens the dollar
Gold tends to gain as a store of value and inflation hedge
Crypto often rallies as investors move into higher-risk assets
Trading volume and open interest typically pick up across major exchanges
As of September 5, the overall crypto market today shows early caution:
Total market cap: $2.68 trillion, down 1.48%
Bitcoin: $79,586, down slightly on the day
Ethereum: $2,452, also lower
Fear & Greed Index: 75, still firmly in "Greed" territory
Derivatives desks logged over $387 million in liquidations within 24 hours as per CoinMarketCap.
The September 15-16 decision, paired with fresh inflation data due before then, will likely settle which direction rates move next. Until that Fed rate decision lands, both trade policy and crypto market today price action stay tied to the same unresolved question.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Crypto markets carry significant risk. Always do your own research before making any investment decisions.
