Reporting Dates for Economic
Indicators and How to Use Economic Reports for Futures Trading
This is a very simple overview of how the various economic
reports that come out throughout the year MAY effect the markets. This
is not a guide to follow. These reports can and will influence market
direction, and it may be in a way that was not predicted, or wanted.
The best course of action for a futures trader to take is to be aware of
when these reports come out, and to be out of the markets when they do.
Especially if you do not have the trading capital to withstand a move
against the direction of your open position. This is a business,
protect your assets.
Monthly Unemployment Report
The monthly
unemployment report is a very closely watched economic report. This
report shows the total unemployment claims filed, as well as changes in the
non-farm payroll. Very few reports are as widely anticipated as the
measures of employment and unemployment. This report shows more than
the general level of economic activity and utilization of labor.
Revisions in the numbers can minimize, or even reverse the effect of the
current data.
How the markets may be affected by the
reports:
Interest Rates:
May go lower on higher
than expected non-farm payroll numbers and interest rates may rise on lower than expected numbers.
Stocks:
Usually follow the
same direction the Interest Rates (Bond Markets) move.
Released By:
Bureau of Labor Statistics
Released:
First Friday of the Month
Release Time:
07:30 Central Time
The
Producer Price Index (PPI) is an economic indicator, given as a
percentage change from the previous month, which measures the average price
change at the producer or wholesale level. An increase in raw material
prices may cause manufacturers to raise consumer prices to make up for the
price increase of the raw material.
It is thought that
the
Producer Price Index is an inflation forecaster, therefore traders
look at both the regular
Producer Price Index and the
Producer Price Index that excludes food and energy prices.
How Are the Markets Affected
Interest Rates:
Higher
Producer Price Index numbers than
expected may lead to bond traders believing that the Federal Reserve may not
act as quickly to slow inflation, possibly leading to higher bond prices and
lower interest, or unchanged interest rates.
Currencies:
Lower than
expected
Producer Price Index numbers may cause currencies to decline.
Stocks:
Lower than
expected
Producer Price Index numbers
may increase buying. If
the PPI figure looks bad, then it may be seen as recessionary then
stocks can go lower.
Released By:
Bureau of Labor Statistics
Released:
Monthly
Release Time:
07:30 Central Time
The
Consumer Price Index is a monthly
measure of inflation based on price changes for a basket of commonly
purchased goods and services including food, housing and energy.
How Are the Markets Affected
Interest Rates:
Higher Consumer Price Index numbers may lead
to lower Treasury Bond futures prices and higher interest rates.
Currencies:
Lower
Consumer Price Index numbers
can influence currency declines
Gold:
Higher than
expected Consumer
Price Index numbers may cause gold to rise in price due to the possibility
of inflation.
Released By:
Bureau of Labor Statistics
Released: Monthly
Release Time:
07:30 Central Time
Employment Cost Index (ECI)
The Employment
Cost Index shows the
change in the cost of labor, without being influenced by shifts in
employment among the different industries and occupations.
How Are the Markets Affected
The Employment
Cost Index can be a good indication of how inflation is effecting
businesses. It may give the futures trader a general idea as to the
direction of the markets, whether business costs may increase or decrease
and be passed onto the consumer as higher or lower prices.
Released By:
Bureau of Labor Statistics
Released:
Quarterly; January, April, July and October.
Release Time:
07:30 Central Time
Federal
Open Market Committee (FOMC) Minutes
The Federal Open
Markets Committee is made up of the 12 members of the US Federal Reserve
Board's policy committee. The Federal Open Markets Committee decides
on whether to increase or decrease official U.S. interest rates, among other
topics.
How Are the Markets Affected
Interest Rates:
The Bond markets
(Interest Rates) are very quiet for a few days before the release of the
Federal Open Markets Committee Minutes. Bonds will rally if there is no interest rate
increase. Bond prices will drop if there is an interest rate increase.
Right after the release of the report, market reactions are usually very
volatile.
Released By:
Federal Reserve Board
Released:
You will have to check the Federal Reserve website for meeting dates and the
release of the FOMC minutes.
Crop Production
The Crop
Production Report contains all
major crop results for the United States. It includes acreage, harvest
results, last years carryover, crop yields and more.
How Are the Markets Affected
The Crop
Production Report influences grain trading for the month. Supply and
demand figures, weather patterns and other market factors can be confirmed
by grain traders.
Released By:
United States Department of Agriculture
Released:
Monthly
Release Time:
07:30 Central Time
Capacity
Utilization Report
Capacity
utilization measures excess demand pressures from the production of goods
which can raise inflation. The capacity utilization rate rises and
falls with business cycles and production. The capacity utilization
rate is shown as a percentage of production, broken down by industry and
sector, and is expressed
as an increase or decrease from the prior month.
How Are the Markets Affected
Interest Rates:
Stronger than
expected capacity utilization is considered inflationary and can be bearish
for interest rate contracts causing bond prices to drop and yields and
interest rates to increase.
Released By:
Bureau of Labor
Statistics
Released:
Monthly
Release Time:
07:30 Central Time
Durable
Goods Orders Report
The Durable Goods
Orders Report shows the intention of
business to make larger purchases such as machinery, aircraft and
automobiles. An increase in orders of big ticket items leads to
increases in production, and a drop durable goods orders lead to growing
inventories which will lead to a decline in production. A larger than
expected increase in the durable goods orders report is considered
inflationary
How Are the Markets Affected
Interest Rates:
An larger than
expected increase in durable goods orders will cause bond prices to drop and
interest rates to rise. A weaker report will cause bond prices to rise
and interest rates to drop.
Released By:
Department of Commerce
Released:
Monthly
Release Time:
07:30 Central Time
The gross domestic
product (GDP) represents a broad measure of economic activity and
signals the direction of overall aggregate economic activity. An
increasing trend of productivity growth, or employment growth, will lead to
an increase in Gross Domestic Product.
If economic growth
climbs too fast the rate of growth cannot be sustained and this can cause
inflation. In order to slow growth and prevent a pickup in inflation,
the Federal Reserve may to increase the lending rate to tighten monetary
policy and slow down the economy.
If the economy has
two consecutive quarters of negative growth, this is considered to be a
recession. During a recessionary period the Federal Reserve will
attempt to stimulate the economy by lowering interest rates.
How Are the Markets Affected
Interest Rates:
Higher than
expected GDP numbers are potentially inflationary and interest rates may be
increased causing bond prices to drop.
Stock Market:
If there is an
increase in GDP it can lead to higher stock prices because of the increase
in company profits, but if GDP increases too much it may be seen as
inflationary and that can lead to an increase in interest rates which may be
bad for the stock market.
Currencies:
Currencies may
increase on higher than
expected GDP growth because of the expected increase in interest rates.
Released By:
U.S. Department of Commerce
Released:
Quarterly
Release Time:
07:30 Central
More Economic
Indicators and Reports:
Additional Resources:
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