A few hours after a rare disagreement between the U.S. Treasury and the Federal Reserve over epidemic relief tools, U.S. Treasury Secretary Mnuchin, in an interview on Friday, November 20, tried to “clarify” that the firepower of the epidemic support program is still sufficient.
Mnuchin said that “there is some misunderstanding about the Treasury Department’s decision not to extend individual emergency lending instruments, and there are still plenty of funds available where they are needed. For example, as much as $800 billion in “potential firepower” could be drawn from the exchange stabilization fund and elsewhere.
“The market should be reassured by the U.S. government’s ability to follow through with a bailout, and we have plenty of room to maneuver. The Treasury Department and the Federal Reserve have worked closely together on lending issues and want to use the funds for a payroll protection program (PPP) for small company loans.”
He denied that the Treasury’s decision was based on bipartisan political differences, commenting, “It’s a very simple thing, and we’re following congressional intent. The municipal bond market is working and people are able to borrow a lot of money in the market, so they don’t need to buy more corporate bonds.
Mnuchin also said he has a very close working relationship with Federal Reserve Chairman Jerome Powell, who “understands my view of what Congress is trying to do.
A few minutes before Mnuchin spoke, Chicago Fed President Evans, who will be an FOMC voter in 2021, called “the actions of the U.S. Treasury Department disappointing,” to which Mnuchin responded with a blunt gesture of resignation: “Ask him to read the very clear letter of the law, or send it directly to the appropriate congressional committee,” he said. The President called to find out.”
Mnuchin also revealed that today he will be meeting with White House Chief of Staff Meadows, with Senate Majority Leader McConnell and House Minority Leader Kevin McCarthy to come up with a more targeted fiscal stimulus package to fight the epidemic, and with congressional Democratic leaders in the coming weeks, “hoping that the Democrats will work with us to try to provide a more targeted fiscal stimulus for the people who really need it. People make targeted bills.”
After the U.S. Treasury Secretary’s comments, spot gold rose about $9 from its flat level in the short term to a daily high of $1,880 per ounce round figure, an intraday gain of more than 0.6%. Spot silver quickly extended its gains to 2%, refreshing its daily high to $24.5276/oz.
Subsequently, the three major U.S. indices opened slightly lower, but the opening 40 minutes of the decline widened, the Dow fell more than 100 points, the Nasdaq decline is relatively small.
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