President Trump’s Attacks on the Fed Shape Markets


President Trump’s demands on the Fed to loosen monetary policy impact financial markets, according to new research published by the Bank of Canada.

In the study released this month, Antoine Camous of the University of Mannheim and Dmitry Matveev of Canada’s central bank looked at Fed funds futures, a guide to where investors are betting monetary policy is headed, on the days that President Trump Tweeted about Chairman Powell and the Fed’s decisions.

By relating price movements of these contracts with President Trump’s tweets on monetary policy, we explore how markets have perceived presidential attempts to influence monetary policy decisions,” the study said. “Overall, our results indicate markets expected the Federal Reserve to adjust monetary policy in the direction suggested by President Trump.

The study found expectations were revised between 0.3 and 2.3 bpts on the days with relevant Tweets.

The Bank of Canada says research reports it publishes may differ from its official view and that it’s not responsible for the findings of such studies.

Have a terrific weekend.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.