New York (AFP)
Do Donald Trump's tweets have an impact on the financial markets? Analysts at US bank JPMorgan Chase think so and have created an index to measure it.
With a touch of irony, they named it "Volfefe Index", an apparent allusion to the non-existent word "covfefe" used by the American president in a tweet that became famous in 2017, which they combined with the term "volatility".
The index aims to analyze the influence of the messages of the tenant of the White House, followed by more than 64 million subscribers on Twitter, on the volatility of the debt market.
"The president has produced more than 10,000 tweets since coming to power, at a rate that has accelerated in recent months," analysts said in a report.
But these messages concern more and more sensitive topics for financial market players such as trade and monetary policy: it is not uncommon for Donald Trump to choose to reveal on the social network major shifts in the negotiations between Washington and Beijing, where it is attacking the president of the US central bank.
"We have found strong evidence that these tweets were moving more and more US debt rates into the market right after their release," analysts say.
Of the 4,000 tweets published in 2018 and 2019 by the president during market hours, they identified 146 having had a real effect on prices.
Some keywords tend to trigger more significant reactions like "China", "Billions", "Products" or "Dollars", as well as the words associated with Russia's investigation of former Special Attorney Robert Mueller.
Creating an index on the subject is an exercise "by nature rather rough", recognize its creators. "But it still provides insight into how the president's unfrenched remarks contribute to market uncertainty."
If the "Volfefe Index" is focused on the debt market, it could be easily transferred to the stock or currency markets, they say.
© 2019 AFP