President Donald Trump's tweets on trade have much more of an impact on the market's expectations for Federal Reserve monetary policy than his tweets directly criticizing the central bank, research by Goldman Sachs has showed.
There's only "weak evidence" that President Trump's tweets criticizing the U.S. Federal Reserve move market monetary policy expectations, Goldman Sachs said in a research paper published Monday, but there is "strong" evidence that his trade-related tweets do affect market expectations of Fed policy.
They then compared these potentially tweet-affected episodes with all other 30-minute intervals of market activity to see whether there were statistically bigger moves. They then accumulated all of the moves in fed funds futures following tweets in each category to obtain the overall impact on the market's monetary policy expectations.is where traders bet on where the Fed's benchmark overnight lending rate will land.
"Once again, there are many tweets that garner little reaction, but there are also quite a few trade policy tweets that lead to sizable swings. This is intuitive, as there are clear channels through which tariff escalation can lead to a dimmer economic outlook," Goldman said.
How do we look back on this in five years?
Maybe its the Bubble Jumpers, those traders that move back and forth between the Stock Bubble and the Bond Bubble, whichever is hot. Only one market out there at the moment that is stable, the 3 month T-Bill rate, because it is run by the only adult in Washington, Powell.
Trump needs to go. I supported him but no longer. He is a drama queen, and destroying Americans wealth and companies. Please impeach this idiot, he needs to go now.
The markets are full of uneducated sycophants if they listen to a guy who lies by the second.
To the extent that Trump’s tweets are killing business confidence, this is prob true. Powell stated as such: “our business contacts around the country have been telling us that uncertainty about trade policy has discouraged them from investing in their businesses.”
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Source: MarketWatch - 🏆 3. / 97 Read more »