Not every economic data has the same influence, because the investment market tends to pay more attention to the local economic trends in the United States, and there are some heavyweight data that investors need to pay special attention to. Here are a few:
Gross domestic product (GDP ) refers to the value of all final products and services produced by a country's economy over a certain period of time (quarter or year). It is recognized as the most important and best indicator to measure a country's economic situation.
Taking the United States as an example, the US authorities will make three assessments of quarterly GDP data, namely the initial value, revised value and final value. Because GDP has the widest statistical scope, it needs to be constantly revised to obtain accurate results. After the end of the quarter, the initial value will be released at the end of the first month, the revised value will be released at the end of the second month, and the final value will be released at the end of the third month. Usually, the initial value has a greater impact on market expectations.
*If GDP growth is too fast, it may lead to rising inflation expectations, and the market will begin to expect the central bank to adopt a tight monetary policy to curb inflation, such as raising interest rates, selling financial assets to recover the monetary base, etc. On the contrary, if GDP growth is not as expected, the market expects the central bank to adopt a loose policy to stimulate economic growth, and may cut interest rates or increase fiscal spending. Therefore, generally speaking, a high economic growth rate is conducive to the appreciation of the domestic currency, while a low economic growth rate is likely to drag down the depreciation of the domestic currency.
ADP , a survey by the private "Automatic Data Processing Corporation of the United States", does not include agricultural and government employees, and measures the changes in the number of new jobs in private non-agricultural companies in the United States. ADP is mostly released on the first Wednesday of the month, and has a certain predictive effect on non-agricultural data, so it is called the small non-agricultural data.
Non-farm payrolls (NFP) are the most important employment data in the United States. Released by the U.S. Department of Labor, they count the changes in new jobs in non-agricultural companies across the country, reflecting the latest developments and growth in all walks of life in the United States. Non-farm payrolls are mainly released on the first Friday of the month. In addition to the number of new jobs, they also include important information such as unemployment rate, average working hours and wages, and employment participation rate.
*The Federal Reserve has two main tasks, one of which is to ensure full employment. The Federal Reserve attaches great importance to changes in non-farm and other employment indicators and will adjust its policies accordingly. If the non-farm data is better than expected, it shows that the labor market is hot and the economic outlook is healthy. If investors' expectations for the Fed's easing are reduced, it will affect the trend of the entire asset market.
The Purchasing Managers Index (PMI ) is compiled by combining the diffusion index. Purchasing managers of the surveyed companies are surveyed monthly and compiled into an index based on the survey results. It is expressed as a percentage, with 50% as the benchmark for the prosperity and decline of the economic outlook. A value above 50% is considered a signal of economic growth, while a value below 50% indicates that the economy is in recession.
Taking the United States as an example, investors use the manufacturing PMI released by ISM and Markit to assess the economic outlook. It should be noted that economic expansion or recession is usually consistent and can be expected by the market. If the data performance is not much different from expectations, the impact is usually limited. However, when the PMI breaks through 50 or falls below 50 for the first time, the market is usually more drastic.
The Producer Price Index (PPI ) measures the price changes of various commodities at different stages of production and is usually used as a leading indicator for observing inflation levels. The Consumer Price Index (CPI ) reflects the price changes of life-related products and services and is an important indicator for observing inflation levels. There is also the Personal Consumption Expenditures (PCE) price index, which calculates inflation using different statistical models.
*Another major task of the Fed is to stabilize prices, which is based on the inflation index. If inflation continues to fall short of the set target or exceeds the target, it will definitely affect the Fed's monetary policy and forward guidance.
The Michigan Consumer Confidence Index is released by the University of Michigan and measures the confidence level of consumers in the economy. The initial value is released at the beginning of the month and the final value is released at the end of the month. Usually the initial value has a greater impact on market expectations. The Conference Board Consumer Confidence Index is released by the Conference Board and is also an indicator of consumer confidence in economic activities. It is usually released on Tuesday at the end of the month.
The statistical designs of the two are different, but the statistical results are roughly the same. In the composition of US GDP, consumption accounts for more than 60%, so consumer confidence is generally considered by the market to have a forward-looking guiding role.
After a simple understanding, investors can grasp the basic logic between data performance and financial market trends. However, it is also important to note that the final result of the data is not the most important, but the gap between the data and expectations. The statistical data is bound to lag, and sometimes it does not necessarily have an impact on the real economy, but instead triggers market sentiment, such as risk aversion.
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