


Global markets were whipsawed in the early hours of Wednesday after President Donald Trump unleashed a barrage of sometimes conflicting Twitter posts.
US stocks slumped Tuesday while Treasuries surged after Trump tweeted that he had decided to halt stimulus talks. His posts during Asian hours on Wednesday – calling for support for airlines and the Paycheck Protection Program – helped erase losses in US stock futures and Japanese shares. Most Asian currencies crept lower amid uncertainty over the next round of US stimulus. In total, Trump tweeted or retweeted just under 40 times in the space of two hours.
That’s boosting market volatility, which has already picked up this month after Trump tested positive for coronavirus as investors grappled with the existing uncertainty surrounding the US election and a stimulus deal. A measure of implied volatility on one-month Treasury options jumped nearly 18 percentage points on October 6, its biggest daily increase since March 12, when the market was rocked by surging coronavirus cases.
“Assuming that Trump doesn’t flip-flop on his stance on the fiscal stimulus package, we think remnant hopes of reviving the risk-on, reflation trade may be put to rest for now,” said Terence Wu, a currency strategist in Singapore at Overseas-Chinese Banking Corp., warning investors should “stay nimble on shifting political winds.”
While the sensitivity of the US Treasury market to Trump’s tweets peaked in May in the midst of the Covid-19 pandemic, his Twitter activity still significantly influences expectations of volatility in the market, an analysis by JPMorgan Chase & Co. analysts who created the Volfefe Index, showed last month.

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