FINA 061 Bloomberg Market Concepts
complete new update material guide
"New news" moves markets. Accordingly, the economic indicators that heralds "new news" are of the
most value to traders and investors.
timeliness of release
GDP statistics are typically released by the government a month or more after the period in question,
by which point dozens of other indicators have been released.
Because GDP statistics are released well after other economic indicators
Nonfarm payrolls, CPI and PMI are published monthly. GDP is only published on a quarterly basis.
GDP
Which economic indicator is most directly linked to unemployment?
nonfarm payrolls
What is the main reason that investment banks create estimates of economic indicators?
to know when specific economic data points are a positive or negative surprise
Which of the following is the biggest pitfall of economic indicators?
1. they do not take into account seasonality
2, they are not sufficiently timely to make investment decisions
3. they only serve as proxys for economic activity
4. they do not consistently presage turning points
they do not consistently presage turning points
In 1994, the Mexican peso declined against the US dollar by 37% during the so-called Tequila Crisis.
What exacerbating factor did Mexico's Tequila Crisis have in common with the Argentine crisis of
2002?
both countries had large dollar-denominated debts
What are 3 examples of failed pegs?
1. British sterling against the Deutsch mark in 1992
2. Mexican peso against the US dollar in 1994
3. Argentine peso against the US dollar in 2002
What is an example of a failed peg?
Hong Kong dollar aginst the US dollar in 1997
Currency market mechanics summary:
-the US dollar equivilent of 5T of currencies are traded every day
-1971 marked the dawn of the modern currency market
-several contries peg their currencies to other currencies
-locked exchange rates are not actually set in stone but are government aspirations
-floating currencies move against one another in a matrix
-the US dollar is the world's reserve currency and is the most heavily traded currency
complete new update material guide
"New news" moves markets. Accordingly, the economic indicators that heralds "new news" are of the
most value to traders and investors.
timeliness of release
GDP statistics are typically released by the government a month or more after the period in question,
by which point dozens of other indicators have been released.
Because GDP statistics are released well after other economic indicators
Nonfarm payrolls, CPI and PMI are published monthly. GDP is only published on a quarterly basis.
GDP
Which economic indicator is most directly linked to unemployment?
nonfarm payrolls
What is the main reason that investment banks create estimates of economic indicators?
to know when specific economic data points are a positive or negative surprise
Which of the following is the biggest pitfall of economic indicators?
1. they do not take into account seasonality
2, they are not sufficiently timely to make investment decisions
3. they only serve as proxys for economic activity
4. they do not consistently presage turning points
they do not consistently presage turning points
In 1994, the Mexican peso declined against the US dollar by 37% during the so-called Tequila Crisis.
What exacerbating factor did Mexico's Tequila Crisis have in common with the Argentine crisis of
2002?
both countries had large dollar-denominated debts
What are 3 examples of failed pegs?
1. British sterling against the Deutsch mark in 1992
2. Mexican peso against the US dollar in 1994
3. Argentine peso against the US dollar in 2002
What is an example of a failed peg?
Hong Kong dollar aginst the US dollar in 1997
Currency market mechanics summary:
-the US dollar equivilent of 5T of currencies are traded every day
-1971 marked the dawn of the modern currency market
-several contries peg their currencies to other currencies
-locked exchange rates are not actually set in stone but are government aspirations
-floating currencies move against one another in a matrix
-the US dollar is the world's reserve currency and is the most heavily traded currency
