Fed’s Bullard: We have already adjusted for trade uncertainty

• Bullard says: Trade uncertainty likely to linger for years to come but does not see conditions warranting a 50 basis point cut all at once. 
• DXY slightly higher although 10-year US yields lower. 

St. Louis Federal Reserve President James Bullard has stated that the Federal Reserve has already adjusted for trade uncertainty. 

Key Quotes:

• Trade uncertainty likely to linger for years to come.
• Fed can't react to daily 'give and take' between major trading partners like us and China.
• Monetary policy 'considerably' looser today than as of late last year.
• Further rate action may be 'desirable,' but the economy still adjusting to Fed's shift as of early this year from raising rates to lowering them.
• Risk that trade uncertainty may slow US economy more than expected.
• Doesn't see a recession coming. 
• Must find out right policy rate following normalization. 
• Does not see conditions warranting a 50 basis point cut all at once. 

FX market implications

This sounds like the door is left open for a September 25 basis point cut as another precautionary measure. Meanwhile, the spread between U.S. shorter- and longer-dated Treasury yields compressed more after Bullard cautioned about these protracted risks from trade for the Fed and the U.S. economy. The Dollar is, however, catching a bid here despite the 10-year yields falling to fresh lows for the sessions.