Macroeconomic Information and Financial Trading

The reaction of bond prices to the arrival of macroeconomic information provides a glimpse into the macroeconomic beliefs of traders and the way in which new information is incorporated into prices. This book challenges the presumption that these reactions represent rational responses to the arrival of relevant information in an informationally efficient capital market. Rather, it suggests that the often anomolous behaviour of speculative prices following the release of economic reports is more indicative of a reaction to “noise” (non-informational factors) than information. At first glance, the quick reaction of speculative prices to the release of economic reports is exactly what one would expect. Upon closer inspection, however, anomalies appear and questions arise, such why do long-term bond prices often react sharply to high-frequency preliminary economic data?; why are the once market-moving weekly money-supply announcements no longer closely watched by bond traders?; why doe