Europe's Central Bankers Fear Turbulence in US Relations
Europe's central bankers have left an annual meeting at Jackson Hole far from reassured about their relationship with Washington, despite efforts by the Federal Reserve to ease concerns.
The Fed policymakers promised to honor all of their commitments and maintain dollar liquidity backstops for global financial stability. However, they could not guarantee against sudden policy shifts by President Donald Trump.
Recent US Treasury interventions to prop up the Japanese yen and lower longer-term US borrowing costs have raised concerns among European officials. The lack of a customary heads-up on euro sales was seen as infuriating, with one official saying 'You always pick up the phone and give a heads-up.'
The Europeans also worry about potential debt buybacks that may need to be financed by issuing more shorter-term maturities. This indicates the administration's willingness to take unusual measures to cap borrowing costs.
European officials fear that the Trump administration could pressure the Fed to start buying bonds on the market, causing further turmoil in markets beyond the US.