How the Fed Moves Markets: Central Bank Analysis for the Modern Era

by Evan A. Schnidman, William D. MacMillan

Overview

Central banks have a profound impact on financial markets, and investors struggle to keep informed about their complex policy decisions. Technological and financial developments have transformed the US Federal Reserve Bank from a financial black box into a vocal, increasingly transparent institution—and the result is such a wealth of textual data that clues to future policy decisions may be lost among the details.

This book presents a solution to this problem by keeping track of those details. Schnidman and MacMillan demonstrate how the latest advances in automated text analysis, combined with the precision of domain expertise, are the keys to understanding how central banks move markets with their words. The authors outline a method to not only examine every piece of every central bank communication, but to do it in a way that is completely comprehensive and unbiased while quickly yielding hard, quantitative data that can be put to work in modern financial models.

Product Details

ISBN-13:	9781137432575
Publisher:	Palgrave Macmillan US
Publication date:	12/02/2015
Edition description:	1st ed. 2016
Pages:	198
Product dimensions:	5.51(w) x 8.50(h) x 0.02(d)

About the Author

Evan A. Schnidman and William D. MacMillan founded Prattle, a text analytics company, to showcase their novel methodology and innovative financial data on central bank communications. CEO Schnidman holds a PhD from Harvard University, USA, and has extensive experience in finance and political economy. CTO MacMillan holds a PhD from the University of Michigan, USA, and has substantial experience as both a professional statistician and a corporate data scientist.

Table of Contents

PART I: EMERGENCE AND EVOLUTION: THE STORY OF THE FED

1. Origins: From Chaos to Structure

2. Independence: Wars, Depression, and Politics

3. Centralization: The Rise of Technology

4. Transparency: Data Meets Democracy

PART II: FED WATCHING: SENTIMENT ANALYSIS AND DATA DRIVEN INVESTING

5. The Briefcase Watch: Fed watching at its Finest?

6. Data Driven Watching: Comprehensive, Unbiased, and Quantitative

7. Fixed Income Investing: Fed Sentiment Drives Bonds

8. Equity Market Investing: Macro Matters

9. Forecasting Policy: Market Response to Fed Communications Trends

10. Forex Investing: Central Bank Sentiment Data across the Globe

PART III: GLOBAL MONETARY POLICY: ANALYZING CENTRAL BANKS AROUND THE WORLD

11. ECB Sentiment: Decoding a Complex Monetary Union

12. BOE Sentiment: The Origin of Modern Central Bank Communications

13. BOJ Sentiment: Monetary Clues in Lost Decades

14. RBA Sentiment: Australia as a Proxy for China

15. Global Sentiment: International Central Bank Transparency