BOE Hold Shocked the Market, Not Prattle | Macro Minutes

  • Thursday, July 14, 2016

Welcome to The Signal’s weekly “Macro Minutes.” Each week, we analyze the most important communications from a specific region and provide insight based on our quantitative analysis of central banks.

7.14.16 Prattle Infographic_BOE

Today’s rate hold announcement from the Bank of England surprised market analysts, but not Prattle.

Prattle projected on July 11 that the BOE would hold rates on July 14 to observe the full economic impact of Brexit before possible stimulus later this year, despite many, many news articles and markets pricing in a 75% probability of a cut. This unique call was based on relatively steady–if not rising–sentiment from the Bank of England in the weeks leading up to the decision.

Traders with access to Prattle data could have made the correct forecast days before the decision and positioned themselves for the rapid spike in the GBP following the rate hold announcement.

The bottom line: in this case, Prattle’s sentiment data proved more accurate than the vast majority of market analysts and economists, and traders relying on Prattle could have profited from this surprise policy decision.

The Signal Team

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