Econ Indicators that move Markets
Macroeconomic news moves markets. News = surprises = Realized - Expected
To the extent there are surprises, markets moves. Bonds markets are more sensitive to macroeconomic surprises.
Example of market reaction - The
bond prices fall (or yields rise) in reaction to
a positive employment surprise
a positive inflation surprise
a positive Fed funds target rate
surprise
The
market understands that these positive surprises will likely lead to a rise in
the future Fed funds rate
Economic Indicators are statistics on macroeconomic variables that help in understanding which stage of the business cycle an economy is at. Of particular importance are the leading indicators which suggest where the economy is likely to be in the near future. No economic indicator is perfect, and many of these statistics are subject periodic revisions.
1. The Unemployment Situation - Issued by BLS First Friday of every month. Key metrics
- U-1: Unemployed for 15 weeks or more
- U-2: People laid off or had a temporary job
- U-3: Total (Offical) Unemployment
- U-4: U-3 plus discouraged workers
- U-5: U-4 plus marginally attached workers
- U-6: U-5 plus part time for economic reasons
Sections of the The Unemployment Situation report
1. Household Survey Data
2. Establishment Survey Data
2. Retail Sales
4. Housing Starts: A housing start is counted on the date that foundations are began (not when the site is cleared). It implies a given level of demand for construction materials and labor over the next few months and a housing completion at the end of that period
Housing starts are closely linked to population growth rates, earnings and employment and interest rates.
5. GDP: The BEA ( Bureau of Economic Analysis) releases a sequence of three GDP estimates for each quarter. The first, labeled the “advance” estimate, is released four weeks after the end of the quarter and tends to have the greatest market impact. The “preliminary” estimate is released a month later, and the “final” estimate comes at the end of the following quarter
6. Consumer Confidence: Examines how consumers feel about jobs, the economy, and spending. Reported monthly last Tuesday of the month.
7. Michigan Index of Consumer Sentiment
The university of Michigan Index of Consumer Sentiment (ICS) is one of the primary indicators of US consumer confidence, It is based on a nationwide survey of households. The ICS is closely watched by market participants, and changes in the index can prompt significant moves in the US equity market.
5. GDP: The BEA ( Bureau of Economic Analysis) releases a sequence of three GDP estimates for each quarter. The first, labeled the “advance” estimate, is released four weeks after the end of the quarter and tends to have the greatest market impact. The “preliminary” estimate is released a month later, and the “final” estimate comes at the end of the following quarter
6. Consumer Confidence: Examines how consumers feel about jobs, the economy, and spending. Reported monthly last Tuesday of the month.
7. Michigan Index of Consumer Sentiment
The university of Michigan Index of Consumer Sentiment (ICS) is one of the primary indicators of US consumer confidence, It is based on a nationwide survey of households. The ICS is closely watched by market participants, and changes in the index can prompt significant moves in the US equity market.