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Economic Indicators and Their Effects on the Markets

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A few years ago I bought a book published by Wharton School Publishing entitled, “The Secrets of Economic Indicators,” subtitled, “Hidden Clues to Future Economic Trends and Investment Opportunities.” In it, economist Bernard Baumohl explains which indicators have the most influence over stocks, which have the greatest impact on bonds, and which indicators are most important to the movement of the U.S. dollar.

The book is written for the seasoned investor as well as the student of economics, as each will find significant benefit from its content. I should mention that the copy I have is the second edition which was published in 2008. Here are a few highlights from the book.

Economic Indicators and Stocks, Bonds, and the Dollar

Certain indicators have a greater influence on stock prices than others. There are also certain indicators to which bonds are the most sensitive. Finally, the U.S. dollar will react more to a different set of economic indicators. The following table contains the top 10 indicators for each, ranked in order of importance. 

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This data is invaluable to money managers. Armed with this information, what do we do? To take full advantage, you would need an efficient method of receiving the data in a timely fashion. You could subscribe to email alerts from the agencies that publish the data. However, this could become tedious and difficult to track. Another option is to use technology, or more specifically, subscribe to a single application which contains all of the data on the list. I’ve been using Thomson ONE, a platform which contains a wealth of financial market statistics plus economic data from 144 different countries 

Obviously, there is no shortage of data. It’s what we do with the data that’s important. 

The table above highlights the data which is most relevant to stocks, bonds, and the dollar. It’s certainly worth a look.


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