Economic Reports Provide Financial Insights

Economic reports — which include the Consumer Price Index, the Producer Price Index, employment updates, and releases on consumer confidence — are useful resources for making informed investing or trading decisions. From a trader's point of view, you can best use these financial tools for the following:

  • Sources of new information: No one should ever have access to the data in economic reports before their release — other than the press, which receives it expressly under embargoed conditions, with instructions not to release the data prior to the proper time — and key members of the U.S. government, such as the Federal Reserve and the president. Anyone else who has the data before the release can be prosecuted if they leak it to others.

  • Risk management tools: You can place your money at risk if you ignore any of the reports. Each has the potential for providing important information that can create key turning points in the market. –

  • Harbingers of more important information: Individual headlines about economic reports are only part of the important data. The markets explore more data beyond what’s contained in the initial release. Sometimes data hidden deep within a report becomes more important than the initial knee-jerk reaction characterized within the headlines and cause the market to reverses its course.

  • Trend-setters: Current reports may not always be what matters. The trend of the data from reports during the last few months, quarters, or years, in addition to expectations for the future, also can be powerful information that moves the markets up or down.

  • Planning tools: Trading solely on economic reports can be very risky and requires experience and thorough planning on your part.

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