From Instagram to X to his very own app Truth Social, President Donald Trump may be one of the most prolific posters, or at least one of the most impactful. Known for bold statements and emphatic disses, common people and politicians stay up to date on Trump’s viewpoints and plans. While many can agree that the posts are entertaining, they also serve another function—Trump’s tweets are known to shift markets. But do they really?
Back in 2019, bulge bracket investment bank J.P. Morgan developed the “Volfefe” Index, an analysis tool that measures the impact of Trump’s tweets on the market, specifically that of U.S. Treasury Bonds. The index revealed that the topics and keywords such as “China,” “billion” and “products” in the tweets had a strong and statistically significant impact on market rates.
This week, J.P. Morgan analysts reported that they are starting to see a deviation from the trends observed when the Volfefe was created in 2019. Unlike Trumps first term and the days that led up to it, this time around, he is posting far fewer and far less powerful items. Of 126 recent posts, only 10% caused clear market shifts. Additionally, of his posts, only 20 in January were related to pertinent topics such as foreign relations, trade and tariffs. Compared to 2018 and 2019, which yielded 60 trade related posts per week, this is a stark difference.
All of this begs the question, do people even care about what he posts anymore? And if not, why?
First, and most obviously, we know what Trump is capable of. During his first term, Trump’s capabilities and persuasive power were unknown. Citizens and investors were unsure that his ideas would pass through the system and be executed. It turned out that around 53% of the promises made during his 2016 campaign were unfulfilled, due to legislative obstacles or other issues. Knowing that now, we can expect a similar performance this time. In fact, the Associated Press reports that of seven tariff-and tax-related promises made this campaign season, work has begun on only one. With this in mind, market participants may be reluctant to react strongly to his posts, considering that they take extended time to materialize—if they do at all.
The most interesting statistic to look at in regard to market reactivity is the Fear & Greed Index, a multifactor measure of investor sentiment and stock prices. While CNN Fear & Greed index data only goes back as far as 2021, people have used the same measures to estimate what the index would have looked like as far back as 2011. Looking at trends in this index and their relation to the announcement of tariffs reveals interesting trends. Using the estimated data and current data from CNN, it seems that the “fear factor” related to tariff announcements and tweets has decreased significantly from Trump’s first term to now. This could potentially show that the market believes that these newly announced tariffs will not end up being implemented. It could also show that they doubt that any tariffs implemented will have a material impact on the economy.
Finally, Trump’s tweets aren’t landing because people are simply desensitized to his rhetoric. In his first term, Trump changed the scene of American politics by becoming one of the boldest and most social-media-active presidents, one of the things that his voters appreciate most. His posts are often generously filled with bold letters, strong adjectives and stirring calls to action. While this was shocking to many at first, it has now become the new normal for both supporters and opponents. Trump is expected to post often and decidedly, as are his political supporters. Americans are less sensitive to his capital letters and targeted posts, dulling their impact.
While Trump’s social media presence remains strong, the data suggests that his posts are not having the market impact that they used to. The continuance of this trend is dependent on a variety of factors, many of which are outside of Trump’s direct control. Nonetheless, this recent data indicates a new change, not just in market sentiment, but in the sentiment surrounding our leader. Trump’s second term is just beginning and the data is limited, but it will be interesting to see how his impact changes as his presidency continues and more decisions are executed.