The Big News

With the release of the monthly US employment report, how and why do various markets respond, and what strategies might be employed prior to the announcement?
Anil Kashyap, Stephen P. Zeldes  | Spring 2008
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Three friends from business school have gathered for lunch when talk turns to the monthly US employment report, sometimes called the king of economic announcements because of its impact on financial markets. All three are employed at the same Wall Street firm: Felix works in foreign exchange, Bob works at the fixed-income desk and Sara trades stocks. Over their meal, the three engage in a spirited discussion of how and why their respective securities have historically responded to the report, how they might anticipate the "big news" through other sources such as the ADP National Employment Report, and what advance positions to take. In this case students examine data and regression analyses on the response of stock prices, interest rates, and exchange rates to grasp how markets respond to macroeconomic news.

Case ID: 080306

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