Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Trump's trade tweets have moved market's Fed expectations, Goldman says

Trump's trade tweets have moved market's Fed expectations, Goldman says

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, Goldman Sachs said.

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.

It said there is “strong” evidence that his trade-related tweets do affect market expectations of Fed policy.

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.

Last month, a new paper by the National Bureau of Economic Research said that Trump’s often-ferocious tweets criticizing the Fed and its Chairman Jay Powell influenced the way traders view interest rate trends.

But Goldman published its own research Monday in which it said its own analysis of Trump’s tweets – which included not only tweets that criticize the Fed but also tweets that directly or indirectly threaten tariff escalation – had only shown “weak evidence for the notion that the market moves its monetary policy expectations in response to Presidential tweets criticizing the Fed.”

By contrast, the bank said, “the evidence that President Trump’s trade-related tweets affect market expectations of Fed policy is strong.”

Goldman’s analysis of Trump’s tweets either criticizing the Fed, or of tweets that directly or indirectly threaten tariff escalation, was to measure the impact on market expectations for Fed policy by looking at the change in Fed funds futures prices one-year ahead from just before a tweet to 30 minutes after.

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.

The Fed funds futures market is where traders bet on where the Fed’s benchmark overnight lending rate will land. Policymakers watch for changes in how markets view where interest rates are heading.

Goldman found that Trump’s tweets on trade, on which he has been vociferous amid an ongoing trade and tariff dispute with China, impacted the Fed funds futures market much more than those criticizing the Fed.

“The market moves are much larger, statistically highly significant, and more clearly skewed to the downside, ranging from -14 basis points (bp) to +4bp. Cumulatively, the impact on market expectations for the funds rate is about -40bp when we include tweets indicating escalation of trade tensions and tweets indicating de-escalation, and about -60bp when we focus only on tweets indicating escalation.”

“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.

Goldman Sachs’ analysts interpreted the findings as showing “that markets believe the President primarily affects Fed policy indirectly by influencing the macroeconomic outlook, with at most a limited perceived role for tweets about the Fed.”


‘Boneheads’


Infamous for his Twitter rampages and rants, Trump is certainly not backwards in coming forwards to share his perspective on a variety of subjects -- not least of all the Fed.

He has repeatedly criticized the Fed’s monetary policy and called on Fed policymakers to slash interest rates amid concerns that the U.S. economy is faltering (largely seen as a result of Trump’s ongoing trade dispute with China), and he has regularly insulted the central bank’s chairman and policymakers.

In August, he called the central bank and its chairman “clueless” then in September he called them “boneheads” just before the Fed cut interest rates for the second time this year.

Following the rate cut, Trump tweeted that the Fed and its chairman had “no ‘guts,’ no sense, no vision!” Again, just last week, Trump called the central bank “pathetic.”

The Fed has cut its main interest rate in July by a quarter point and again in September, taking down its benchmark overnight lending rate to a target range of 1.75% to 2%. Trump has said the Fed is risking U.S. competitiveness by keeping rates substantially higher than most other nations in the developed world.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
House Republicans Move to Defund OECD Over Global Tax Dispute
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
Intel Reports Revenue Beats but Sees 81% Rise in Losses
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
×