Economic news covers all financial developments, including market movements, business trends, and government policies. It is a vital source for investors to stay informed. However, with fake news and rumors spreading at a fast pace, it is important to verify the credibility of financial reports. Some platforms offer AI-based tools to detect fraudulent content and keep readers safe. Some of the most trusted sources for breaking financial news include Bloomberg, Reuters, The Wall Street Journal, and Investopedia.
Exploring the impact of economic news on key asset prices reveals some interesting patterns. First, only a few economic indicators generate asset price responses that are economically significant and measurably persistent through the day. Second, the strongest effects are found in bond yields, with stock prices responding least strongly. Finally, the magnitude of the response depends on whether it is good or bad news. Good news prompts a rise in interest rates, while bad news tends to lead to lower prices.
A standard approach to estimating the impact of economic announcements on assets defines news as the prediction of an empirical forecasting model. This is a convenient and readily available method, but it can produce misleading results. In particular, the survey data that are used to construct the prediction often contain measurement errors. These errors lead to a mismeasurement of the asset price response.
The Rigobon and Sack method corrects for these error by defining the measure of news as “true news” (the indicator as released minus the indicator as expected one instant before release) plus a random measurement error. As a result, their estimates of the effect of news on assets are generally larger than those of the standard approach.