Indexes: a summary, not the whole story
An index is a basket. The S&P 500 and the Nasdaq Composite in New York, the FTSE 100 in London, the DAX in Frankfurt, the Nikkei 225 in Tokyo and the Hang Seng in Hong Kong each compress hundreds of share prices into one figure. That figure is useful for mood, but it hides detail. A flat index day can contain a sharp fall in banks and a rally in utilities.
That is why our notes break index moves down by sector, using the Global Industry Classification Standard (GICS) maintained by S&P Dow Jones Indices and MSCI. When we write that "energy led", we mean the energy sector's contribution, not a general impression.
Rates: reading a central bank decision
Interest rates set by the Federal Reserve, the European Central Bank and the Bank of England feed into mortgages, corporate borrowing and the value of currencies. A decision day has several parts, and the headline rate is often the least surprising one.
- The statement. Changes in wording from the previous meeting can signal a shift in thinking.
- The vote. Dissenting members show how unified the committee is.
- Projections. The Fed's quarterly Summary of Economic Projections includes the "dot plot" of members' rate expectations.
- The press conference. Answers to reporters' questions frequently move markets more than the statement itself.
We report the decision and the vote as fact. Our reading of the tone is labelled as analysis.
Bond yields and why they lead
Government bond yields, especially the U.S. 10-year Treasury and the UK 10-year gilt, act as a reference price for money. When yields rise, borrowing gets more expensive for companies and households, and the value of future profits falls in valuation models. That is why growth-oriented technology shares often react strongly to yield moves. The gap between 2-year and 10-year yields, the "yield curve", is watched as a signal of how investors view the economic cycle.
Data releases that set the tone
Some scheduled data reliably move markets: the U.S. jobs report from the Bureau of Labor Statistics, Consumer Price Index inflation figures, and gross domestic product estimates. In Europe, Eurostat's flash inflation estimate plays a similar role. Our morning note lists what is due that day and the time it is released, so you know when volatility is likely.
How we label. A published figure from a statistics agency is fact. A consensus forecast is attributed to whoever compiled it. Our view on what a surprise implies is always analysis.
What we leave out
We do not publish price targets, tips or trading signals. We avoid describing single-day moves as trends. And when a story depends on an anonymous source, we say that plainly and weigh it accordingly.
