Professional Documents
Culture Documents
A. Inflationary Indicators
FF Notes Food and energy prices account for about a quarter of CPI, but they
tend to be very volatile and distort the underlying trend. The FOMC
usually pays the most attention to the Core data - so do traders;
Why Traders Consumer prices account for a majority of overall inflation. Inflation is
Care important to currency valuation because rising prices lead the central
bank to raise interest rates out of respect for their inflation containment
mandate;
Acro Expand Consumer Price Index (CPI), Federal Open Market Committee (FOMC);
FF Notes Food and energy prices account for about a quarter of CPI, but they
tend to be very volatile and distort the underlying trend. The FOMC
usually pays the most attention to the Core data - so do traders;
Why Traders Consumer prices account for a majority of overall inflation. Inflation is
Care important to currency valuation because rising prices lead the central
bank to raise interest rates out of respect for their inflation containment
mandate;
Acro Expand Consumer Price Index (CPI), Federal Open Market Committee (FOMC);
3. PPI m/m
Measures Change in the price of finished goods and services sold by producers;
Why Traders It's a leading indicator of consumer inflation - when producers charge
Care more for goods and services the higher costs are usually passed on to
the consumer;
Measures Change in the price of finished goods and services sold by producers,
excluding food and energy;
FF Notes Food and energy prices make up about 40% of overall PPI which tends
to mute the importance of the Core data;
Why Traders It's a leading indicator of consumer inflation - when producers are
Care nearing full capacity they respond by raising prices, and the higher
costs are usually passed on to the consumer;
Measures Percentage that consumers expect the price of goods and services to
change during the next 12 months;
FF Notes There are 2 versions of this data released 14 days apart – Preliminary
and Revised. The Preliminary release is the earlier and thus tends to
have the most impact;
Why Traders Expectations of future inflation can manifest into real inflation, primarily
Care because workers tend to push for higher wages when they believe
prices will rise;
Derived Via Survey of about 500 consumers which asks respondents where they
expect prices to be 12 months in the future;
Measures Percentage that consumers expect the price of goods and services to
change during the next 12 months;
Frequency Released monthly, usually on the last Friday of the current month;
Next Release Nov 23, 2012
FF Notes The 'Previous' listed is the 'Actual' from the Preliminary release and
therefore the 'History' data will appear unconnected. There are 2
versions of this data released about 15 days apart – Preliminary and
Revised. The Preliminary release is the earliest and thus tends to have
more impact;
Derived Via Survey of about 500 consumers which asks respondents where they
expect prices to be 12 months in the future;
Measures Annualized change in the price of all goods and services included in
GDP;
FF Notes While this is q/q data, it's reported in an annualized format (quarterly
change x4).
Why Traders It's the broadest measure of inflation, encompassing all activities
Care included in GDP, and is a primary instrument that the central bank uses
to assess inflation;
Frequency Released monthly, on the first business day after the month ends;
Why Traders It's a leading indicator of consumer inflation - when businesses pay
Care more for goods and services the higher costs are usually passed on to
the consumer;
Derived Via Survey of about 400 purchasing managers which asks respondents to
rate the relative level of prices paid for goods and services;
Acro Expand The Institute for Supply Management (ISM), Purchasing Managers'
Index (PMI);
B. Employment Indicators
11. Average Hourly Earnings m/m
Measures Change in the price businesses pay for labor, excluding the farming
industry;
Frequency Released monthly, usually on the first Friday after the month ends;
FF Notes This is the earliest data related to labor inflation. Source changed series
calculation formula as of Feb 2010;
Why Traders It's a leading indicator of consumer inflation - when businesses pay
Care more for labor the higher costs are usually passed on to the consumer;
Derived Via ADP provides payroll services to many corporations in the US. They use
the data collected from a sample of around 400,000 client businesses to
derive the overall employment estimations;
Acro Expand Automatic Data Processing, Inc. (ADP);
Measures Change in the number of employed people during the previous month,
excluding the farming industry;
Frequency Released monthly, usually on the first Friday after the month ends;
FF Notes This is vital economic data released shortly after the month ends. The
combination of importance and earliness makes for hefty market
impacts;
Nonfarm Payroll
The Nonfarm Payroll Employment Report, produced by the U.S. Department of
Labor Bureau of Labor Statistics tracks the number of jobs added or lost each month. If
the economy is adding jobs at a healthy pace, interest rates may move higher. Higher
interest rates are attractive to foreign investors, increasing interest in and demand for the
U.S. dollar. The opposite is also true, with job losses having the potential to push interest
rates lower and weaken demand for the dollar. The Nonfarm Payroll Report is released on
the following Friday after the conclusion of the reference month at 8:30 A.M. Eastern
Standard Time. (To learn more about the Nonfarm Report, see Trading The Non-Farm
Payroll Report)
A statistic researched, recorded and reported by the U.S. Bureau of Labor
Statistics intended to represent the total number of paid U.S. workers of
any business, excluding the following employees:
This monthly report also includes estimates on the average work week
and the average weekly earnings of all non-farm employees.
Read
more: http://www.investopedia.com/terms/n/nonfarmpayroll.asp#ixzz2AKtvBzfD
Measures The number of individuals who filed for unemployment insurance for the first time
during the past week;
FF Notes This is the nation's earliest economic data. The market impact fluctuates from
week to week - there tends to be more focus on the release when traders need to
diagnose recent developments, or when the reading is at extremes;
Why Traders Although it's generally viewed as a lagging indicator, the number of unemployed
Care people is an important signal of overall economic health because consumer
spending is highly correlated with labor-market conditions;
Measures Percentage of the total work force that is unemployed and actively
seeking employment during the previous month;
Frequency Released monthly, usually on the first Friday after the month ends;
- The percentage of the total labor force that is unemployed but actively seeking
employment and willing to work.
Read
more: http://www.investopedia.com/terms/u/unemploymentrate.asp#ixzz26zXF3F8M
http://www.bls.gov/news.release/empsit.nr0.htm
http://www.google.co.in/publicdata/explore?ds=z1ebjpgk2654c1_&met_y=unemployment_rate&idi
m=country:US&fdim_y=seasonality:S&dl=en&hl=en&q=unemployment+rate+us#!ctype=l&strail=fals
e&bcs=d&nselm=h&met_y=unemployment_rate&fdim_y=seasonality:S&scale_y=lin&ind_y=false&r
dim=country&idim=country:US&ifdim=country&hl=en_US&dl=en&ind=false
http://www.bls.gov/cps/tables.htm
C. Consumption/Sales Indicators
15. Consumer Credit m/m
Measures Change in the total value of outstanding consumer credit that requires
installment payments;
Why Traders It's correlated with consumer spending and confidence - rising debt
Care levels are a sign that lenders feel comfortable issuing loans, and that
consumers are confident in their financial position and eager to spend
money;
Measures Change in the total value of sales at the retail level, excluding
automobiles;
FF Notes Automobile sales account for about 20% of Retail Sales, but they tend
to be very volatile and distort the underlying trend. The Core data is
therefore thought to be a better gauge of spending trends;
Definition
“(Retail Sales Core) Derivative of Retail Sales that excludes the Automobile Sales component. Automobile Sales
make up roughly 25% of Retail Sales, but they can be very volatile from month to month and can distort the picture.
Retail Sales with the exclusion of this volatile component is thought to be a better indicator of the underlying trend in
consumer spending.”
Retail Sales make up about 2/3 of U.S. GDP (Gross Domestic Product); Core Retail Sales report excludes Auto sales
which comprises 20% of total retail sales. Therefore, we are more focused on daily consumer spending on goods
found in such places as department stores, gas stations, and restaurants.
17. Retail Sales m/m
FF Notes This is the earliest and broadest look at vital consumer spending data;
Why Traders It's the primary gauge of consumer spending, which accounts for the
Care majority of overall economic activity;
The Preliminary UoM Consumer Sentiment Indicator is a survey of consumer confidence conducted by the University
of Michigan. This is a telephone survey which gathers information on consumer expectations regarding the overall
economy. It measures the attitudes and expectations concerning both present and future economic conditions of 500
consumers. They are asked about how they see their own financial futures and opinions on the prospects for the U.S.
economy. It is an early assessment of consumer sentiment regarding personal finances, business conditions and
purchasing power.
There are two versions of this data released about 15 days apart – Preliminary and Revised. The Preliminary release
is the earliest and thus tends to have the most impact; it is released around the 10th of each month. A final report for
the prior month is released on the first of the month.
Just like Consumer Confidence, the level of consumer sentiment is directly related to the strength of consumer
spending. The more confident consumers are about the economy and their own personal finances, the more likely
they are to spend. The index is useful for the investors because it gives a snapshot of whether consumers feel like
spending money
Frequency Released monthly, usually on the last Friday of the current month;
FF Notes The 'Previous' listed is the 'Actual' from the Preliminary release and
therefore the 'History' data will appear unconnected. There are 2
versions of this data released about 15 days apart – Preliminary and
Revised. The Preliminary release is the earliest and thus tends to have
more impact;
Derived Via Survey of about 500 consumers which asks respondents to rate the
relative level of current and future economic conditions;
Measures Annualized number of new residential building permits issued during the
previous month;
Why Traders It's an excellent gauge of future construction activity because obtaining
Care a permit is among the first steps in constructing a new building;
Why Traders It's a leading indicator of economic health because building construction
Care produces a wide-reaching ripple effect. For example, jobs are created
for the construction workers, subcontractors and inspectors are hired,
and various construction services are purchased by the builder;
Why Traders It's a leading indicator of the housing industry's health because rising
Care house prices attract investors and spur industry activity;
Measures Change in the number of homes under contract to be sold but still
awaiting the closing transaction, excluding new construction;
FF Notes This data is released about a week later than Existing Home Sales, but
it's more forward-looking as a contract is signed several weeks before
the home is counted as sold;
Why Traders It's a leading indicator of economic health because the sale of a home
Care triggers a wide-reaching ripple effect. For example, renovations are
done by the new owners, a mortgage is sold by the financing bank, and
brokers are paid to execute the transaction;
Measures Annualized number of new single-family homes that were sold during
the previous month;
Why Traders It's a leading indicator of economic health because the sale of a new
Care home triggers a wide-reaching ripple effect. For example, furniture and
appliances are purchased for the home, a mortgage is sold by the
financing bank, and brokers are paid to execute the transaction;
Derived Via Survey of about 900 home builders which asks respondents to rate the
relative level of current and future single-family home sales;
Measures Annualized number of residential buildings that were sold during the
previous month, excluding new construction;
Why Traders It's a leading indicator of economic health because the sale of a home
Care triggers a wide-reaching ripple effect. For example, renovations are
done by the new owners, a mortgage is sold by the financing bank, and
brokers are paid to execute the transaction;
Measures Change in the total value of new purchase orders placed with
manufacturers for durable goods;
FF Notes This data is usually revised via the Factory Orders report released about
a week later. Durable goods are defined as hard products having a life
expectancy of more than 3 years, such as automobiles, computers,
appliances, and airplanes;
Why Traders It's a leading indicator of production - rising purchase orders signal that
Care manufacturers will increase activity as they work to fill the orders;
Measures Change in the total value of new purchase orders placed with manufacturers for
durable goods, excluding transportation items;
FF Notes Orders for aircraft are volatile and can severely distort the underlying trend. The
Core data is therefore thought to be a better gauge of purchase order trends;
Why Traders It's a leading indicator of production - rising purchase orders signal that
Care manufacturers will increase activity as they work to fill the orders;
Measures Annualized number of cars and trucks sold domestically during the
previous month;
FF Notes Listed as an 'All Day' event because the 'Actual' is comprised of data
from major auto manufacturers which report their sales figures
throughout the afternoon. While this is monthly data, it's reported in an
annualized format (monthly figure x12);
Why Traders It's a sign of consumer confidence - rising demand for expensive
Care durable goods shows that consumers are confident in their future
financial position and feel comfortable spending money;
Derived Via Survey of about 900 consumers which asks respondents to rate the
relative level of economic conditions including six-month economic
outlook, personal financial outlook, and confidence in federal economic
policies;
Acro Expand Investor's Business Daily (IBD), TechnoMetrica Institute of Policy and
Politics (TIPP);
D. Manufacturing/Production Levels
31. Industrial Production m/m
Why Traders It's a leading indicator of economic health - production reacts quickly to
Care ups and downs in the business cycle and is correlated with consumer
conditions such as employment levels and earnings;
Why Traders It's a signal of future business spending because companies are more
Care likely to purchase goods once they have depleted inventories;
Why Traders It's a signal of future business spending because companies are more
Care likely to purchase goods once they have depleted inventories;
Measures Change in the total value of new purchase orders placed with
manufacturers;
FF Notes This report contains a revision of the Durable Goods Orders data
released about a week earlier, and fresh data regarding non-durable
goods;
Why Traders It's a leading indicator of production - rising purchase orders signal that
Care manufacturers will increase activity as they work to fill the orders;
Derived Via Survey of about 200 manufacturers in New York state which asks
respondents to rate the relative level of general business conditions;
Why Traders It's a leading indicator of economic health - businesses react quickly to
Care market conditions, and changes in their sentiment can be an early
signal of future economic activity such as spending, hiring, and
investment;
Derived Via Survey of about 250 manufacturers in the Philadelphia Federal Reserve
district which asks respondents to rate the relative level of general
business conditions;
Frequency Released monthly, on the first business day after the month ends;
Why Traders It's a leading indicator of economic health - businesses react quickly to
Care market conditions, and their purchasing managers hold perhaps the
most current and relevant insight into the company's view of the
economy;
Derived Via Survey of about 400 purchasing managers which asks respondents to
rate the relative level of business conditions including employment,
production, new orders, prices, supplier deliveries, and inventories;
Acro Expand The Institute for Supply Management (ISM), Purchasing Managers'
Index (PMI);
Why Traders It's a leading indicator of economic health - businesses react quickly to
Care market conditions, and their purchasing managers hold perhaps the
most current and relevant insight into the company's view of the
economy;
Derived Via Survey of about 600 purchasing managers which asks respondents to
rate the relative level of business conditions including employment,
production, new orders, prices, supplier deliveries, and inventories;
Frequency Released monthly, on the first business day after the month ends;
Why Traders It's a leading indicator of economic health - businesses react quickly to
Care market conditions, and their purchasing managers hold perhaps the
most current and relevant insight into the company's view of the
economy;
Derived Via Survey of about 600 purchasing managers which asks respondents to
rate the relative level of business conditions including employment,
production, new orders, prices, supplier deliveries, and inventories;
Acro Expand Purchasing Managers' Index (PMI);
Frequency Released monthly, on the third business day after the month ends;
Why Traders It's a leading indicator of economic health - businesses react quickly to
Care market conditions, and their purchasing managers hold perhaps the
most current and relevant insight into the company's view of the
economy;
Derived Via Survey of about 400 purchasing managers which asks respondents to
rate the relative level of business conditions including employment,
production, new orders, prices, supplier deliveries, and inventories;
Acro Expand The Institute for Supply Management (ISM), Purchasing Managers'
Index (PMI);
E. GDP/ FOMC
42. Advance GDP q/q
FF Notes While this is q/q data, it's reported in an annualized format (quarterly
change x4). There are 3 versions of GDP released a month apart –
Advance, Preliminary, and Final. The Advance release is the earliest and
thus tends to have the most impact;
Why Traders It's the broadest measure of economic activity and the primary gauge of
Care the economy's health;
FF Notes This data represents the balance of domestic and foreign investment -
for example, if foreigners purchased $100 billion in US stocks and
bonds, and the US purchased $30 billion in foreign stocks and bonds,
the net reading would be 70.0B. The market impact tends to be
significant but varies from month to month;
Why Traders Demand for domestic securities and currency demand are directly linked
Care because foreigners must buy the domestic currency to purchase the
nation's securities;
Measures Difference in value between imported and exported goods and services
during the reported month;
FF Notes A positive number indicates that more goods and services were
exported than imported;
Why Traders Export demand and currency demand are directly linked because
Care foreigners must buy the domestic currency to pay for the nation's
exports. Export demand also impacts production and prices at domestic
manufacturers;
Trade Balance
The trade balance report, which is jointly produced by the Bureau of Economic Analysis
(BEA) and the U.S. Census Bureau, provides insight into import and export activity. The
indicator within the Trade Balance Report that is most well known is the nominal trade
deficit, which represents the current dollar value of U.S. exports minus the current dollar
value of U.S. imports. When imports exceed exports, the nation is said to have a trade
deficit. When the reverse is true, the nation is said to have a trade surplus.
A trade deficit is bad news for the dollar, as it means foreign goods are in demand. Those
goods are ultimately purchased with foreign currency which creates a higher demand for
foreign currency. A trade surplus, on the other hand, means that foreign consumers are
buying more American goods. This results in demand for the dollar. The trade balance
report is released approximately six-weeks after the end of the month it references (on or
about the 15th of the month) at 8:30 A.M. Eastern Standard Time and covers the two prior
months. (For more information on imports and exports, see What Is The Balance Of
Payments?)
FF Notes The FOMC usually changes the statement slightly at each release. It's
these changes that traders focus on.
Why Traders It's the primary tool the FOMC uses to communicate with investors
Care about monetary policy. It contains the outcome of their vote on interest
rates and other policy measures, along with commentary about the
economic conditions that influenced their votes. Most importantly, it
discusses the economic outlook and offers clues on the outcome of
future votes;
Also Called Interest Rate Statement, Fed Statement, Monetary Policy Statement;
FF Notes This analysis is used by the FOMC to help make their next decision on
interest rates. However, it tends to produce a mild impact as the FOMC
also receives 2 non-public books - the Green Book and the Blue Book -
which are widely believed to be more influential to their rate decision;
Derived Via Anecdotal evidence supplied by the 12 Federal Reserve banks regarding
local economic conditions in their district;
Measures Highest yield on a 30-year bond the government sold at auction, and
the bid-to-cover ratio of the auction;
Usual Effect No consistent effect - there are both risk and growth implications;
Why Traders Yields are set by bond market investors, and therefore they can be used
Care to decipher investors' outlook on future interest rates. The bid-to-cover
ratio represents bond market liquidity and demand, which can be used
to gauge investor confidence;
Measures Highest yield on 10-year bonds the government sold at auction, and the
bid-to-cover ratio of the auction;
Usual Effect No consistent effect - there are both risk and growth implications;
FF Notes Auction results are reported in an 'X.XX|X.X' format - the first number
is the highest interest rate of the bonds sold, and the second number is
the bid-to-cover ratio (number of bids made per bid accepted);
Why Traders Yields are set by bond market investors, and therefore they can be used
Care to decipher investors' outlook on future interest rates. The bid-to-cover
ratio represents bond market liquidity and demand, which can be used
to gauge investor confidence;
FF Alert 'Actual' data initially misstated, then rectified 20 seconds after release.
We regret the error;
Usual Effect No consistent effect - there are both inflationary and growth
implications;
FF Notes While this is a US indicator, it most affects the loonie due to Canada's
sizable energy sector;
Why Traders It influences the price of petroleum products which affects inflation, but
Care also impacts growth as many industries rely on oil to produce goods;
Measures Change in the number of cubic feet of natural gas held in underground
storage during the past week;
Usual Effect No consistent effect - there are both inflationary and growth
implications;
FF Notes While this is a US indicator, it most affects the loonie due to Canada's
sizable energy sector;
Also Called Nat Gas Stocks, Nat Gas Inventories, Working Gas;
FF Notes This index is designed to predict the direction of the economy, but it
tends to have a muted impact because most of the indicators used in
the calculation are released previously. Source changed series
calculation formula as of Jan 2012;