The U.S. Federal Reserve is quietly gearing up to intervene if markets show signs of deeper stress, though officials insist there’s no immediate cause for alarm.
Boston Fed President Susan Collins has acknowledged that while the financial system remains stable, contingency plans are in place if liquidity vanishes or trading becomes disorderly.
Rather than relying solely on interest rate cuts, Collins pointed to the Fed’s broader emergency toolkit—tools it has deployed quickly during past episodes of market turmoil. She also warned that inflation could stay stubbornly above 3%, making rate cuts an unlikely first response if things unravel.
Meanwhile, Wall Street is already on edge. JPMorgan CEO Jamie Dimon sees potential cracks forming in the Treasury market, blaming regulatory constraints for limiting the system’s flexibility. If volatility spikes, he believes the Fed will step in—but only after panic sets in.
Recent market moves suggest that hedge funds are backing away from riskier trades involving Treasury spreads and derivatives. A sudden unwind of these positions could destabilize prices, echoing the chaos of March 2020 when the Fed had to inject massive liquidity to calm a collapsing bond market.
Some in the banking sector are calling for changes to capital rules, including a proposal to exclude Treasuries from leverage ratio calculations. Dimon supports the idea, warning that without it, the Fed may be forced to intervene yet again.
Adding to the anxiety, BlackRock CEO Larry Fink believes the U.S. may already be in a recession. He sees little relief from the recent 90-day delay on new tariffs and expects economic uncertainty to drag on unless a broader resolution is reached.
Despite the warnings, neither Fink nor Collins anticipates a full-blown financial crisis—just a prolonged period of unease unless structural changes are made.
Alexander Stefanov
Reporter at Coindoo
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over 8 years of experience covering the crypto, blockchain and fintech industries, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics.
Source: https://coindoo.com/fed-prepares-for-market-rescue-as-wall-street-eyes-trouble-ahead/