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President Donald Trump’s Treasury secretary called top U.S. bankers on Sunday amid an ongoing rout on Wall Street and made plans to convene a group of officials known as the “Plunge Protection Team.”
U.S.
stocks have fallen sharply in recent weeks on concerns over slowing economic
growth, with the S&P 500 index .SPX on
pace for its biggest percentage decline in December since the Great Depression.
“Today I convened
individual calls with the CEOs of the nation’s six largest banks,” Treasury
Secretary Steven Mnuchin said on Twitter shortly before financial markets were
due to open in Asia.
U.S. equity index
futures dropped late on Sunday as electronic trading resumed to kick off a
holiday-shortened week. In early trading, the benchmark S&P 500’s e-mini
futures contract ESv1 was off by about a quarter of a percent.
The
Treasury said in a statement that Mnuchin talked with the chief executives of
Bank of America (BAC.N),
Citi (C.N),
Goldman Sachs (GS.N),
JP Morgan Chase (JPM.N),
Morgan Stanley (MS.N)
and Wells Fargo (WFC.N).“The
CEOs confirmed that they have ample liquidity available for lending,” the
Treasury said.
Mnuchin “also
confirmed that they have not experienced any clearance or margin issues and
that the markets continue to function properly,” the Treasury said.
Mnuchin’s calls to
the bankers came amid a partial government shutdown that began on Saturday
following an impasse in Congress over Trump’s demand for more funds for a wall
on the border with Mexico. Financing for about a quarter of federal government
programs expired at midnight on Friday and the shutdown could continue to Jan.
3.
The Treasury said
Mnuchin will convene a call on Monday with the president’s Working Group on
Financial Markets, which includes Washington’s main stewards of the U.S.
financial system and is sometimes referred to as the “Plunge Protection Team.”
The group, which was
also convened in 2009 during the latter stage of the financial crisis, includes
officials from the Federal Reserve as well as the Securities and Exchange
Commission.
Wall Street is also
closely following reports that Trump has privately discussed the possibility of
firing Federal Reserve Chairman Jerome Powell. Mnuchin said on Saturday Trump
told him he had “never suggested firing” Powell.
Trump has criticized
the U.S. central bank for raising interest rates this year, which could further
dampen economic growth.
Mnuchin’s calls come
as a range of asset classes have suffered steep losses.
In
December alone, the S&P 500 .SPX is
down nearly 12.5 percent, while the Nasdaq Composite .IXIC has
slumped 13.6 percent. The Nasdaq is now in a bear market, having declined
nearly 22 percent from its record high in late August, and the S&P is not
far off that level.
Corporate credit
markets have been under duress as well, and measures of the investment grade
corporate bond market are poised for their worst yearly performance since the
2008 financial crisis.
The high-yield bond
market, where companies with the weakest credit profiles raise capital, has not
seen a deal all month. The last time that happened was in November 2008.
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