President Donald Trump has made it clear to 64 million Twitter followers he believes the U.S. stock market would be in far better shape if only the Federal Reserve would do his bidding and further lower interest rates. Yet the president himself regularly moves financial markets without any assist from the Fed when he takes to social media.
So say analysts at JPMorgan Chase, who’ve created an index to quantify the market impact of having such a prolific presidential presence on Twitter. Dubbed the “Volfefe Index,” a tongue-in-cheek reference to Mr. Trump’s since-deleted “covfefe” tweet from 2017, the gauge indicates that the president’s tweets have a statistically significant effect on Treasury yields.
The White House is increasingly focused on trade and monetary policy, and “everything from casual sentiments to seemingly formal policy intentions have been disseminated, globally and instantaneously, via this carefully scrutinized social media platform,” JPMorgan Chase fixed-income strategists Munier Salem, Josh Younger and Henry St John wrote Friday in a note to clients.
“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,” the bond market strategists concluded.
The president has produced more than 10,000 tweets since taking office, and the count of market-moving missives has increased in recent weeks, with those using words including “China,” “great,” “products,” “billion” and “Democrats” most likely to have an impact, the JPMorgan Chase analysts found.
The index tracks how much Treasury yields rise or fall within five minutes after a tweet by Mr. Trump. It then gauges the odds of a given tweet moving the market based on the increased volatility in yields seen after his prior tweets.