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PoliticsDonald Trump is tweeting more and it's impacting bond market volatility

00:50  09 september  2019
00:50  09 september  2019 Source:   cnbc.com

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President Trump ' s market -moving tweets most often address trade and monetary policy, with keywords including "China In an attempt to quantify the impact of Trump ' s tweets on the bond market , J.P. Morgan devised a "Volfefe Index" to analyze how the president' s tweets are influencing

President Donald Trump speaks as he receives a status report on Hurricane Dorian in the Oval Office of the White House in Washington, September 4, 2019. In an attempt to quantify the impact of Trump ’ s tweets on the bond market , J.P. Morgan devised a “Volfefe Index” to analyze how the


Donald Trump is tweeting more and it's impacting bond market volatility© Provided by CNBC LLC President Donald Trump speaks as he receives a status report on Hurricane Dorian in the Oval Office of the White House in Washington, September 4, 2019.

Donald Trump is tweeting more and it's affecting the bond market.

In fact, the president's market-moving tweets ballooned in August as he hammered China on trade and went after the Federal Reserve on interest rates.

In an attempt to quantify the impact of Trump's tweets on the bond market, J.P. Morgan devised a "Volfefe Index" to analyze how the president's tweets are influencing volatility in U.S. interest rates.

J.P. Morgan found that the index, named after Trump's infamous and still mysterious "covfefe" tweet, explains a measurable fraction of the moves in implied rate volatility for 2-year and 5-year Treasurys.

President Trump Seen at the Golf Course While Hurricane Dorian Approaches the U.S.

President Trump Seen at the Golf Course While Hurricane Dorian Approaches the U.S. He also spent Labor Day criticizing the head of the AFL-CIO

tweets are generally followed by a stretch of higher volatility across global currency markets . “We find little evidence that the market achieves ‘fatigue’ on Trump tweeting ,” Chatterji wrote. a bit larger and more consistent market moves, it would not be surprising to us if the market showed more , not

A new analysis by Bank of America-Merrill Lynch says President Trump ' s tweets often have a negative effect on equity returns, with his posts contributing to volatility exacerbated by the U. S .-China trade war, policy uncertainty, and a yield curve warning of a possible recession.

"This makes rough sense as much of the president's tweets have been focused on the Federal Reserve, and as trade tensions are broadly seen as, first and foremost, impactful on near-term economic performance and, likewise, the Fed's reaction to such developments," wrote the authors of the J.P. Morgan report.

Donald Trump is tweeting more and it's impacting bond market volatility© Provided by CNBC LLCDonald Trump is tweeting more and it's impacting bond market volatility© Provided by CNBC LLC

Trump's market-moving messages most often address trade and monetary policy, with key words including "China," "billion" and "products." These tweets are increasingly less likely to receive favorable responses, such as likes or retweets, from the president's followers.

Donald Trump is tweeting more and it's impacting bond market volatility© Provided by CNBC LLC

Trump's Twitter habits

Since his election in 2016, Trump has averaged more than 10 tweets a day to his nearly 64 million followers —roughly 14,000 total over that period associated with his personal account, of which more than 10,000 occurred after the 2017 inauguration.

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Is it true that Donald Trump ’ s future tweets may come with a warning from Twitter? How is the stock market able to handle Trump ’ s volatility and There is a perception among many investors that stock market volatility has increased. However,when measured on a daily basis volatility has more

This implies that when Trump tweets , this information will be reflected in financial markets even before it hits headlines. So now, let’ s collect the data. Going forward, perhaps a linear regression controlling for certain factors such as market size, momentum, and volatility with a larger sample size may

Out of about 4,000 non-retweets occurring during market hours from 2018 to the present, only 146 moved the market.

Most of Trump's tweets come around noon to 2:00 pm, with a 1:00 pm tweet roughly three times as likely to arrive at any other hour of the afternoon or evening, according to J.P. Morgan's report.

Donald Trump is tweeting more and it's impacting bond market volatility© Provided by CNBC LLC

Trump's 3:00 am tweets are also more common than 3:00 pm tweets, which can be a nuisance for U.S. rates markets, since overnight market depth tends can be thin.Trump is presumably asleep from 5:00 am to 10:00 am, according to the report, since there's a lull in tweeting activity during that time.

Days when Trump tweets a lot are also associated with negative stock market returns, according to Bank of America Merrill Lynch.

While Trump's twitter activity can disrupt markets with sudden attacks on China trade or the Federal Reserve, he has still been good for the stock market overall. The Dow is up 42% since the 2016 presidential election and 31% since his inauguration.

"Trade talk, political campaigning and tweets have contributed to volatility, from China to Fed policy to tax policy," wrote the brokerage's chief equity strategist Savita Subramanian.

"And new tariffs announced in August indicate downside risk to our 2019/20 EPS growth forecasts of +2%/+7%, where indirect impacts from hits to corporate or consumer confidence could be significant."

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