Susan Collins on Standby: “Absolutely Ready” to Calm Markets
As volatility rattles Wall Street and Treasury yields spike, Boston Fed President Susan Collins vows swift action if markets veer into chaos.
Editorial Team (ET)May 8, 2025
Financial markets are rattling. Volatility is pulsing through Wall Street. The Treasury market is quaking under the weight of uncertainty. But amid the economic tremors, one message from the U.S. Federal Reserve cuts through the noise—loud, clear, and resolute. “We would absolutely be prepared to do that as needed.” Those were the words of Susan Collins, president of the Boston Federal Reserve, in a statement that felt more like a battle cry than bureaucratic reassurance.
The timing couldn’t be more critical. A turbulent week capped off by President Donald Trump’s aggressive trade actions has left global investors clutching the rails. A sell-off in stocks, bond market jitters, and whispers of recession have spread across the financial system like a slow-moving wildfire. And yet, as panic simmers just below the surface, Collins’ voice offered calm—and a clear warning that the Fed stands ready to step in with its full arsenal if necessary.
Collins emphasized that, at present, markets are still functioning. Liquidity remains intact. But behind that reassurance lies a familiar echo from 2020, when the coronavirus crisis nearly broke the back of global financial systems. Then, the Fed moved with unprecedented speed—reviving crisis-era programs, slashing interest rates to near zero, and removing purchasing caps on Treasuries. Now, the message is simple: if it comes to that again, they won’t hesitate.
This time, however, the central bank's focus isn’t solely on interest rates. Collins made it clear that emergency rate cuts are not the silver bullet for market dysfunction. The Fed’s toolkit has evolved, and standing facilities—the same kind that were pivotal in 2020—are already on standby. These mechanisms are designed to maintain liquidity, prevent a credit freeze, and calm the kind of systemic panic that turns turbulence into a financial disaster.
The bond market is where the cracks are showing first. Over the past week, the 10-year Treasury yield has surged by half a percentage point, hitting 4.5 percent. For a market that usually inches in fractions, that’s a seismic move. Traders are facing a dual storm: intense volatility and evaporating liquidity. JPMorgan strategist Jay Barry summed it up neatly—“liquidity is bad because volatility is high.” In other words, trades are happening, but not without cost. Bid-ask spreads are widening, price discovery is under pressure, and the risk of disorderly markets is rising.
And while Wall Street remains outwardly orderly, the undercurrent is anything but calm. Every headline out of Washington feeds the churn. Trump’s tariff threats are pushing inflation forecasts higher and spooking businesses across the country. John Williams of the New York Fed echoed this concern, warning of inflation spikes, higher unemployment, and economic stagnation—all potential consequences of this escalating trade war.
Still, the Fed isn’t blinking. Susan Collins’ remarks show a central bank that’s not just reactive—it’s proactive. Her confidence wasn’t performative; it was policy in motion. In a week where sentiment was fraying and trust in institutions was being tested, Collins delivered a message Wall Street needed to hear: The Federal Reserve will not allow the system to break.
If the Fed has to return to the playbook it used in 2020—so be it. That playbook includes lending facilities, asset purchases, and coordinated action across departments and central banks. It’s not the first move, but it’s a ready one. The goal? Keep the gears turning, the markets functioning, and panic from turning into paralysis.
The broader takeaway here is that market function is now just as vital as inflation or employment in the Fed’s calculus. In times of stress, maintaining liquidity becomes the primary mission. That’s why Collins pointed out that interest rates, while essential for monetary policy, are not the ideal tool for every situation. This nuanced approach signals a central bank that understands complexity—and is willing to act with precision.
What remains to be seen is whether the warning alone will calm markets. Often, the mere hint of Fed readiness can act like a financial tranquilizer. But if tensions continue to escalate—if trade wars deepen, yields spike higher, and liquidity dries up—markets may soon call the Fed’s bluff. And if that moment arrives, Collins’ words won’t be remembered as mere reassurance. They’ll be remembered as the opening line in the next chapter of central bank intervention.
Conclusion
When markets shake, investors look for signals. This week, Susan Collins didn’t just offer a signal—she fired a flare. With volatility rising and economic crosswinds gathering strength, the Fed’s readiness to stabilize markets is not just a footnote in a financial report—it’s the firewall between a turbulent correction and a full-blown crisis. The Fed isn’t just watching—it’s waiting, watching, and ready.
