Roubini Warns Against Counting on Fed Rescue Amid Market Chaos
Nouriel Roubini, famously dubbed “Dr. Doom” for forecasting the 2008 financial crisis, cautioned investors not to expect the Federal Reserve to swiftly intervene in calming the latest bout of market turmoil.
The warning follows President Donald Trump’s aggressive move last week to impose sweeping tariffs on multiple countries—including a dramatic increase in duties on Chinese imports, now at a staggering 104%. The announcement sent shockwaves through global markets, igniting fears of a looming recession in the U.S. and beyond.
In the aftermath, the Nasdaq 100 has plunged 12%, and bitcoin (BTC) saw a sharp 10% slide, briefly dipping below $75,000. Meanwhile, the U.S. Treasury market has been roiled by surging volatility, with yields on longer-term bonds rising steeply—driving prices down even as stocks sold off. The turbulence has sparked renewed concerns over a potential dollar liquidity crunch similar to the one seen during the COVID-19 crash in 2020.
Traders are increasingly betting the Fed will step in to provide support, with market expectations now pricing in at least five quarter-point rate cuts from Fed Chair Jerome Powell this year, according to CME’s FedWatch tool. But Roubini sees a different outcome.
“There’s a game of chicken playing out between the Trump put and the Powell put,” Roubini told Bloomberg. “But the Powell put’s strike price is lower—Powell is going to wait until Trump blinks first.”
In short, Roubini believes the Fed won’t rush to ease policy unless Trump signals a retreat from his current stance, especially since the root of the volatility lies in trade policy. Powell’s more cautious approach suggests he’ll resist intervening until the political landscape shifts.
Market sentiment remains highly reactive to even the slightest hint of de-escalation. Earlier this week, an unverified report about a potential pause in tariff enforcement sent markets soaring—only for the optimism to quickly evaporate when the report proved false.
Sticky Inflation, But No Recession
Looking ahead, Roubini expects inflation to remain stubbornly high due to elevated tariffs, putting downward pressure on long-term U.S. bonds. That, he says, is a key reason for the recent drop in 10- and 30-year Treasury prices and the corresponding jump in yields.
Despite rising fears, Roubini doesn’t foresee the U.S. tipping into a recession. His forecast stands in contrast to market sentiment and various prediction platforms, many of which now assign a greater-than-50% chance of the economy experiencing consecutive quarters of negative growth.
