Unit 4 · Level 3 · Reading the macro calendar
Expectations vs reality
Before every big print, forecasters publish a consensus, and prices already contain it. What moves markets is the GAP between the number and the expectation. Inflation of 5% can spark a rally if 5.4% was feared. And sometimes good news is bad news: a red-hot jobs report can sink stocks, because it means rates stay higher for longer.
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What you get asked
CPI lands at 3.0% versus a consensus of 3.4%. The likely reaction:
Markets grade against expectations, not against zero. Better-than-feared inflation means softer rate expectations, and that gap is what rallies.
Why can a STRONG jobs report hurt stock prices?
A hot labour market lets the central bank keep squeezing. The rate channel from Unit 2 can outweigh the good news about the economy itself.
If an outcome is fully ___ in, its arrival barely moves the price.
'Priced in' means the market already traded on it. Only the surprise component is news; the rest is confirmation.
Order how a data print actually gets traded
By release time the consensus is already in the price. The print's only power is its distance from what was expected.
'Good news is bad news' happens when markets…
Two channels fight: what data says about profits versus what it says about rates. When the rate channel dominates, the logic flips. Confusing, until you see the machine. 🐜
The rest of this unit
CPI day, Fed day, jobs day: learn to read the week's big prints like the pros do.