Roubini: Powell Likely to Delay Until Trump Makes the First Move

Roubini: Don’t Count on the Fed to Save Markets from Trump’s Trade Turmoil

Economist Nouriel Roubini, famously nicknamed “Dr. Doom” for his early warning of the 2008 financial crisis, has a stark message for investors: don’t expect the Federal Reserve to rush in and stabilize markets rattled by President Trump’s aggressive trade policies.

Last week, Trump triggered a global market sell-off by announcing sweeping new tariffs, including a massive hike on Chinese imports to 104%. The fallout has been swift—major indexes have tumbled, with the Nasdaq 100 down 12%, and bitcoin falling 10% to briefly trade under $75,000. Treasury yields have spiked on longer-dated bonds, sending bond prices lower and fueling fears of a liquidity crunch reminiscent of the COVID-era panic in 2020.

As traders speculate on a potential Fed intervention to ease financial stress, market odds now reflect expectations of at least five rate cuts this year, according to the CME FedWatch Tool. But Roubini says the market may be getting ahead of itself.

“There’s a game of brinkmanship underway,” Roubini told Bloomberg. “The Powell put won’t kick in until after the Trump put fails—Powell will wait until Trump backs down.”

In essence, Roubini believes Fed Chair Jerome Powell won’t act until Trump signals a retreat from his tariff offensive. With the current instability largely driven by policy decisions from the White House, the Fed may be reluctant to respond prematurely.

Markets, however, remain hypersensitive. Earlier this week, a rumor about a possible pause in tariffs triggered a sudden surge in risk assets—only to fade just as fast when the report turned out to be false.

Inflation Sticks, But Recession Unlikely

Roubini also pointed to the inflationary impact of elevated tariffs, predicting that price pressures will remain stubborn—bad news for longer-term bonds. That view is reinforced by the sharp sell-off in 10- and 30-year Treasuries and the accompanying spike in yields.

Despite the economic noise, Roubini doesn’t see a recession on the horizon. While some prediction markets are pricing in a greater-than-even chance of back-to-back quarters of negative growth, he remains confident the U.S. economy will avoid a technical downturn.