There’s a new Wall Street TACO index — and this one is saying it’s time for Trump to strike a deal

JPMorgan has introduced a "TACO" barometer — shorthand for "Trump Always Chickens Out" — as a way to gauge the likelihood that the U.S. president backs away from threatened tariffs or other hardline positions. The index adds to a small but growing set of Wall Street tools designed to quantify political risk that has become difficult to model through conventional economic data alone.

For markets, the relevance lies in how policy uncertainty feeds directly into asset prices. Threatened tariffs can move currencies, bond yields, and equities within minutes, while the prospect of a negotiated climbdown can reverse those moves just as quickly. An index that attempts to read the probability of de-escalation gives traders and analysts one more input when assessing headline risk.

What to watch is whether the barometer proves predictive over time or simply mirrors sentiment after the fact. Its value will depend on how consistently it maps political signals to actual outcomes — and whether investors treat it as a standalone signal or one factor among many.