From attacks on the Federal Reserve and its chairman Jerome Powell to boasts about the U.S. economy, it’s no secret that President Trump’s tweets have the power to move markets.
Analysts at JPMorgan Chase have crafted a new index, called the “Volfefe Index,” that aims to quantify the affect the president’s tweets have on Treasury yields. The index’s name derives from Trump’s late-night “covfefe” tweet, which created quite a buzz on social media in 2017.
“The subject of these tweets has increasingly turned toward market-moving topics, most prominently trade and monetary policy,” the analysts with JP Morgan Chase said in a report issued by the firm. “And we find strong evidence that tweets have increasingly moved U.S. rates markets immediately after publication.”
The president has sent over 10,000 tweets to his more than 64 million followers since taking office, with the number of market-moving tweets from Trump skyrocketing in the past month, according to a JP Morgan Chase report on analysts’ findings.
Tweets with the words “China,” “billion,” “products,” and “Democrats” were identified as those most likely to trigger a move in the markets.
Trump frequently uses Twitter to make announcements about administration personnel and policies, and the White House said in 2017 the president’s tweets are considered “official statements.”
Most recently, the president has used his account to broadcast his thoughts on the protracted trade war with China, accuse the Federal Reserve and Powell of holding back economic growth, and laud the continued economic expansion and growth.
As a result of the heightened focus on trade and monetary policy, “a broad swath of assets from single-name stocks to macro products have found their price dynamics increasingly beholden to a handful of tweets from the commander in chief,” analysts with JP Morgan Chase said.
