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Illustration: Sarah Grillo/Axios

The "tweet" button on President Trump's iPhone is moving markets and has become increasingly consequential for trillions of dollars of assets around the globe.

Why it matters: The markets don't trust Trump — nor his Treasury secretary, Steven Mnuchin — to be a calming influence in times of stress.

  • Quite the opposite: They now expect Trump to be an unsettling influence even when things are otherwise quiet. And they're worried that even the Fed is falling under Trump's spell.

What they're saying: A new paper from the National Bureau of Economic Research finds that whenever Trump tweets about interest rates, the market prices in a little bit more of a future rate cut.

Market participants believe that the Fed will succumb to the political pressure from the President.
— Francesco Bianchi, Howard Kung, and Thilo Kind, NBER

JP Morgan's Volfefe index demonstrates that Trump's tweets have also increased volatility in the futures market more broadly.

My thought bubble: The markets normally look to the U.S. Treasury secretary for reassurance during difficult times, but as WaPo's Tory Newmyer says, Mnuchin is "Trump's most loyal surrogate." When Mnuchin weighs in on issues like Trump's conversations with Ukrainian president Volodymyr Zelensky, that damages his credibility more broadly.

  • Trump's fiscal policy is also adding to market volatility. The Trump tax cuts have caused trillion-dollar deficits, which means the government has a huge and constant thirst for free cash. That in turn exacerbates liquidity shortages like the one we saw last week.

The bottom line: The stock market has done a pretty good job of shrugging off Trump's tweets, most of the time. But money markets — the places where businesses keep most of their cash — are much more important for a smooth-functioning economy than the stock market is. And they're showing increasing signs of concern.

Go deeper

23 mins ago - Politics & Policy

Vaccinations, relief timing dominate Sweet 16 call

Sen. Joe Manchin (D-W.V.) speaks during a news conference in December with a group of bipartisan lawmakers. Photo: Caroline Brehman/CQ-Roll Call, Inc via Getty Images

Vaccine distribution, pandemic data and a cross-party comity dominated today's virtual meeting between White House officials and a bipartisan group of 16 senators, Senator Angus King told Axios.

Why it matters: Given Democrats' razor-thin majority in both chambers of Congress, President Biden will have to rely heavily on this group of centrist lawmakers — dubbed the "Sweet 16" — to pass any substantial legislation.

Progressives pressure Schumer to end filibuster

Senate Majority Leader Chuck Schumer. Photo: Win McNamee / Getty Images

A progressive coalition is pressuring Chuck Schumer on his home turf by running a digital billboard in Times Square urging the new majority leader to end the Senate filibuster.

Why it matters: Schumer is up for re-election in 2o22 and could face a challenger, and he's also spearheading his party's broader effort to hold onto its narrow congressional majorities.

5 hours ago - Health

U.S. surpasses 25 million COVID cases

A mass COVID-19 vaccination site at Dodger Stadium on Jan. 22 in Los Angeles, California. Photo: Mario Tama/Getty Images

The U.S has confirmed more than 25 million coronavirus cases, per Johns Hopkins data updated on Sunday.

The big picture: President Biden has said he expects the country's death toll to exceed 500,000 people by next month, as the rate of deaths due to the virus continues to escalate.

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