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
Elon Musk Unveils Grokipedia: An AI-Driven Alternative to Wikipedia
Russia’s President Putin Declares Burevestnik Nuclear Cruise Missile Ready for Deployment
US Administration Under President Donald Trump Reportedly Lifts Ban on Ukraine’s Use of Storm Shadow Missiles Against Russia
White House Announces No Imminent Summit Between Trump and Putin
China Presses Netherlands to “properly” Resolve the Nexperia Seizure as Supply Chain Risks Grow
Merz Attacks Migrants, Sparks Uproar, and Refuses to Apologize: “Ask Your Daughters”
Apple Challenges EU Digital Markets Act Crackdown in Landmark Court Battle
Shouting Match at the White House: 'Trump Cursed, Threw Maps, and Told Zelensky – "Putin Will Destroy You"'
‘No Kings’ Protests Inflate Numbers — But History Shows Nations Collapse Without Strong Executive Power
"The Tsunami Is Coming, and It’s Massive": The World’s Richest Man Unveils a New AI Vision
EU Moves to Use Frozen Russian Assets to Buy U.S. Weapons for Ukraine
Europe Emerges as the Biggest Casualty in U.S.-China Rare Earth Rivalry
“Firepower” Promised for Ukraine as NATO Ministers Meet — But U.S. Tomahawks Remain Undecided
The Sydney Sweeney and Jeans Storm: “The Outcome Surpassed Our Wildest Dreams”
Dutch Government Seizes Chipmaker After U.S. Presses for Removal of Chinese CEO
AI and Cybersecurity at Forefront as GITEX Global 2025 Kicks Off in Dubai
Ex-Microsoft Engineer Confirms Famous Windows XP Key Was Leaked Corporate License, Not a Hack
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Mayor in western Germany in intensive care after stabbing
Australian government pays Deloitte nearly half a million dollars for a report built on fabricated quotes, fake citations, and AI-generated nonsense.
BYD’s UK Sales Soar Nearly Nine-Fold, Making Britain Its Biggest Market Outside China
Latvia to Bar Tourist and Occasional Buses to Russia and Belarus Until 2026
Wave of Complaints Against Apple Over iPhone 17 Pro’s Scratch Sensitivity
Munich Airport Reopens After Second Drone Shutdown
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
The Personality Rights Challenge in India’s AI Era
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Study Finds No Safe Level of Alcohol for Dementia Risk
Trump Says Ukraine Can Fully Restore Borders with NATO Backing
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Germany Weighs Excluding France from Key European Fighter Jet Programme
Cyberattack Disrupts Check-in and Boarding Systems at Major European Airports
Björn Borg Breaks Silence: Memoir Reveals Addiction, Shame and Cancer Battle
When Extremism Hijacks Idealism: How the Baader-Meinhof Gang Emerged and Fell
JWST Data Brings TRAPPIST-1e Closer to Earth-Like Habitability
Trump Orders $100,000 Fee on H-1B Visas and Launches ‘Gold Card’ Immigration Pathway
France’s Looming Budget Crisis and Political Fracture Raise Fears of Becoming Europe’s “Sick Man”
Three Russian MiG-31 Jets Breach Estonian Airspace in ‘Unprecedentedly Brazen’ NATO Incident
European manufacturers against ban on polluting cars: "The industry may collapse"
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
Christian Brueckner Released from German Prison after Serving Unrelated Sentence
×