Mnuchin calls US banks to reassure jittery markets

US Treasury secretary Steve Mnuchin took the extraordinary step of calling America's six largest banks on Sunday in an effort to reassure jittery markets over the increasingly erratic behaviour of President Donald Trump and the government shutdown.

Mnuchin said he had spoken to the heads of Bank of America, Citi, Goldman Sachs, JP Morgan Chase, Morgan Stanley and Wells Fargo who all assured him they had enough cash to fund operations.

There had been no concerns about bank liquidity concerns, which made Mnuchin's actions all the more confusing.

Mnuchin added that he would on Monday convene the president’s working group on financial markets, which Federal Reserve chairman Jerome Powell and the head of the Securities and Exchange Commission.

The group, which was formed after the stock market crash of October 1987, is known more commonly as the “plunge protection team” and met in 2009 in the latter stages of the financial crisis.

US stocks have slumped in December as investors fret about the partial federal government shutdown, US-China trade dispute, interest rate rises and Trump’s dispute with Powell.

Over the weekend there were reports that claimed Trump had discussed the possibility of firing Powell, although Mnuchin said he had spoken to the president, who claimed he “never suggested firing” Powell.

However, Mncuchin also cited Trump as saying: “I totally disagree with Fed policy. I think the increasing of interest rates and the shrinking of the Fed portfolio is an absolute terrible thing to do at this time”.