As worries of a full-on market crash and recession spread around the world, the Federal Reserve is under more and more pressure to lower interest rates and pump cash into the financial system at its next meeting later today.

After last week’s wild selloff, rate traders, bond desks, institutional funds, and macro experts are all getting ready for a policy move soon. The response was quick and harsh, and it’s still going on.

This latest round of chaos comes after two days of some of the worst back-to-back market losses in recent memory. US stocks fell hard on Thursday and Friday, more than at any time since the crash of 1987, the financial crisis of 2008, or the first wave of the COVID pandemic in 2020.

Bloomberg talked to Bob Michele, global head of fixed income at JPMorgan Asset Management. He said that the White House and the Federal Reserve “are acting as though the market moves aren’t business as usual.” In a direct tone, Bob said, “We don’t believe the Fed will act until something breaks.”

Traders bet on an emergency Fed move because the bond market crashed.

Even before the Federal Reserve’s next policy choice, investors have already started to price in a move that is seen as aggressive.

Overnight interest-rate swaps now show that rates will likely drop by 125 basis points by the end of the year, which is the same as five 25-basis-point drops.

There were only three cuts priced in just one week ago. So far, traders think there’s a 40% chance that the Federal Reserve will cut its key rate by 25 basis points soon, well before May 7.

People are running away from danger as panic over President Trump’s tariffs spreads, and he hasn’t shown any signs of slowing down. He told the press on Sunday night, “Forget about markets for a second.” On Monday, he also wrote on Truth Social that:

Oil prices are down, interest rates are down (the Fed should cut rates!), food prices are down, and there is NO INFLATION,” he said, adding that the US is getting “billions of dollars a week” from countries that have to deal with the new taxes.

Trump then called China “the biggest abuser of them all” after they responded with a 34% tariff hike. Our past “leaders” are to blame for letting this and so much else happen to our Country,” he said. MAKE THE USA GREAT AGAIN!

Bob said that the Fed can’t wait any longer. As an example, he said that the Fed stepped in right away in 1987, 2008, and 2020, all three times when the market crashed in a similar way. He told them that just because things don’t “look disorderly yet” doesn’t mean the system isn’t breaking down below the surface.

Bob said, “When you look at private credit and the percentage of a mean around it, it’s very high.” Businesses at the lower end of the quality scale have been having a hard time. He said it was dangerous that the cost of getting money was going up while growth was going down.

Once volatility goes over a certain level, Arthur Hayes, founder of BitMEX and long-time macro gambler, said on social media that the Fed will have to step in. Arthur said, “Watch the bond volume MOVE Index if you want to know when the Fed will give up and say “Brrr”.” If it keeps going up, people who trade financed government or corporate bonds will have to sell because the margin requirements will get too high.

The Fed will fight these two markets to the death. >140 yachtzee time!”

Bob also talked about Federal Reserve Chair Jerome Powell and said bad things about what he said last Friday. Powell said that the FOMC still thinks inflation is “elevated.” He also warned that the price increases due to tariffs might only be “temporary,” but they should still be kept an eye on.

Powell made it clear that he wouldn’t cut rates right away just because the market was down. Bob didn’t agree with that, though. “Don’t forget that they talked about the long lags,” he said. This means they’re going to wait for the accident to happen before they act, and then they’ll have to wait for the long delays to happen?” “I don’t believe it.

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