President Trump has made clear he wants lower interest rates—and fast. He’s publicly blamed Fed Chair Jerome Powell for “costing the U.S. $900 billion a year” in added interest expenses, citing the $9 trillion in debt coming due for refinancing this year. But the June jobs report makes that campaign harder to justify. A resilient labor market and still-firm wage growth weaken the case for aggressive easing. Even if the Fed were to cut rates as Trump wants, the savings on government debt are not as straightforward as he suggests. Only a fraction of Treasury debt is short-term and highly sensitive to Fed moves.

Meanwhile, cutting too much or too soon—especially under political pressure—risks spooking bond markets, pushing long-term yields higher and undercutting any savings from lower short-term rates. In short, Trump’s fiscal gamble hinges on borrowing costs staying low, but the Fed’s independence—and inflation risk—may stand in the way.

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Rate Cuts Aren’t Meant for Booms—But That’s What Markets Want

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Rate cuts have historically been used to cushion recessions, not accelerate bull markets. Yet in today’s environment, where growth is slowing but not collapsing, the hope for easier monetary policy is about one thing: liquidity. For equity markets, that means more fuel. Lower interest rates reduce discount rates, expand multiples, and unleash cash into risk assets—especially high-beta names and speculative pockets of the market. In other words, even a hint of a cut is a green light for the next leg of the rally.
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Retail investors are already positioned for it. In the first half of 2025, they poured a record $155 billion into U.S. stocks and ETFs, outpacing even the meme-stock mania of 2021. Dip-buying remains relentless, penny stocks dominate volumes, and single-name tech plays like NVDA, TSLA, and PLTR are soaking up capital at a record clip. Even leveraged ETFs and GLD options are seeing outsized retail participation. The sentiment is clear: if the Fed cuts, the market rips.