In the bond markets, President Donald Trump appears to be losing his influence.

For the first eight months of this year, the U.S. Treasury market traded about in step with Trump's approval ratings, according to Goldman Sachs Group Inc. analysts. To wit, whenever his ratings fell, so did yields on 10-year Treasuries - suggesting that investors saw lower odds of the president's ability to push through a big tax-cut package that might stimulate growth at the expense of wider government deficits.

Since early September, though, things have changed. With Trump's approval rating declining, Treasury yields have climbed. As of a Gallup poll dated Dec. 13, some 36% of Americans approve of the job the president is doing, down from 46% in January.  

The explanation, Goldman analysts Charles Himmelberg and James Weldon wrote Thursday in a report, is that investors appear to have shifted their focus toward economic data and the likelihood that Congressional leaders can pass big corporate tax cuts. To wit, the correlation has broken down; bond investors no longer seem to be paying attention to the president's ups and downs.

"For much of this year, his approval ratings appeared to capture the market's assessment of the prospects for a fiscal stimulus via a tax bill," the analysts wrote. "Since September, however, the market's focus appears to have shifted to other factors, such as Congressional desire to pass a tax bill."

The new Goldman Sachs report arrived during a week when Trump suffered a setback after the special-election defeat of Roy Moore, the Republican U.S. Senate candidate from Alabama, who had been accused of preying on teenage girls when he was in his 30s. Trump had endorsed Moore despite the allegations, and Alabama is a solidly Republican state, so the victory of Democrat Doug Jones marked a repudiation of the president's support.

Yet the following day, Republican lawmakers continued making progress on a $1.5 trillion bill that would slash corporate tax rates, with House and Senate negotiators reaching a deal that could bring legislation to a vote in both chambers before the end of the year.

According to the Goldman Sachs analysts, the breakdown of the correlation between Trump's popularity and fiscal measures can also be seen in the U.S. stock market. Unlike in bond markets, stock investors see corporate tax cuts as a positive given the likely boost to quarterly profits. 

Since early September, a basket of high-tax stocks - those most likely to benefit from a cut in the corporate rate - has surged relative to the broader Standard & Poor's 500 Index of U.S. shares, despite Trump's sagging rating. Previously, there was a strong correlation between the high-tax stocks and Trump's popularity. 

"The equity market's assessment of tax legislation has decoupled from presidential approval," Himmelberg and Weldon wrote.

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