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President Donald Trump is considering invoking a 213-year-old federal law that would allow him to deploy active-duty US troops to respond to protests in cities across the country, according to four people familiar with the internal White House discussions, according to NBC News.

The article states that Trump has warmed to the idea of using the Insurrection Act, adopted in 1807, to deploy troops as his frustrations mount over the protests in response to the death of George Floyd, a black man who was killed in police custody last week in Minneapolis.

Key notes

Some of the president’s aides have been encouraging him for days to invoke the act.

White House Press Secretary Kayleigh McEnany left open the possibility that the president could invoke the Act.

“The Insurrection Act, it’s one of the tools available, whether the president decides to pursue that, that’s his prerogative,“ McEnany said.

Governors can request the federal government send active duty troops to help in cases of civil unrest like the widespread protests plaguing US cities. But, so far, no state governors have requested active duty troops to assist and instead have relied on local law enforcement and National Guard soldiers and airmen on state active duty.

Governors often prefer the National Guard forces in these cases because they can legally perform law enforcement duties in the US, whereas troops on active duty cannot or they violate the Posse Comitatus Act.

Market Implications

There is brewing sentiment that Trump will lose the race to win the presidential elections this fall which is likely to be a negative for markets. Uncertainty will not favour the US stock markets, which is an appealing factor for the safe havens such as the yen and CHF.  This could be a weight for the USD.