Steven Mnuchin
Steven Mnuchin Image Credit: Bloomberg

Treasury Secretary Steven Mnuchin said not to take literally President Donald Trump’s characterization of the U.S. Federal Reserve chief as an enemy on par with China’s leader.

Mnuchin, speaking on “Fox News Sunday” from the Group of Seven meeting in Biarritz, France, also said the U.S. isn’t facing a slowdown and that the inverted yield curve - often a leading indicator of a downturn - reflects the market’s expectations for further Fed rate cuts.

“We don’t see a recession on the horizon. I don’t think the yield curve reflects a recession, I think the yield curve reflects the fact that it anticipates the Fed is going to lower short-term rates and the long end has already reflected that,” Mnuchin said.

Asked about Trump’s tweet on Friday, musing on whether Fed Chairman Jerome Powell or Chinese President Xi Jinping was the bigger enemy, Mnuchin said, “On Powell, I don’t think it was a literal comment that he’s an enemy.”

Mnuchin and White House economic director Larry Kudlow defended the president’s recent moves on trade and the economy as the leaders of the world’s top industrialized nations meet in France.

Days after Trump announced higher tariffs on Chinese exports to the U.S., drawing a furious response from Beijing, Mnuchin said he was “somewhat hopeful” Beijing will come around to a sweeping trade agreement with the U.S., and Kudlow insisted that talks are ongoing.

‘The conversation between the China side and the U.S. side continues, negotiations continue,” Kudlow said on CNN’s “State of the Union.” “The U.S. side is continuing to plan for a visit from the China side sometime in the month of September.”