UNITED STATES, WASHINGTON (OBSERVATORY) — The Volfefe index is named after the mysterious tweet of the US president about covfefe.
The fact that Twitter messages from US President Donald Trump affect the mood in the US bond market is no longer speculation, and JPMorgan Chase & Co experts decided that once the phenomenon is there, we need to somehow systematize it. They developed the Volfefe index, named after the cryptic tweet of the White House chapter covfefe.
The creators of the index suggested that the president’s tweets have a statistically significant effect on treasury returns. The number of Trump’s market tweets increased last month. In them, words such as “China”, “billion”, “products”, “democrats” and “great” were found. Most likely, according to analysts, these mantras will affect prices, and negatively: experts believe that such tweets are less and less pleasing to the audience.
“Trade and monetary policy are attracting more and more attention of the executive branch, and everything from random moods to seemingly formal political intentions is instantly spreading all over the world through this social network,” analysts at JPMorgan Chase & Co, led by Josh Younger, explain and Münier Salem. “At the same time, we found that the dynamics of prices for a whole range of assets, from common stocks to macro products, responds to the president’s tweets.”
Experts have calculated that since taking power in 2016, Trump has posted an average of 10 tweets per day. At the same time, 146 publications made from 2018 to the present during the opening hours of the exchange really affected the market situation.
Bank of America experts also note that on days of peak Trump activity, when tweets are streaming one after another, often negative stock market returns are recorded.
This article is written and prepared by our foreign editors writing for OBSERVATORY NEWS from different countries around the world – material edited and published by OBSERVATORY staff in our newsroom.
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