The Financial Times recently used Prattle’s analytics to visualize the tone of Fed communications dating back to the late 1990s.
Prattle quantifies the market impact of language. Our text analysis technology is primarily used to understand the impact of corporate and central bank communications. Click here to learn more about our process.
Just two weeks after Janet Yellen gave the Federal Reserve’s strongest signal yet that it is going to lift rates again, sentiment analysis of Fed communications over the past month indicates that the central bank is fast becoming more hawkish.
“The speed with which the aggregate trend rose in the last few weeks is remarkable,” says Evan Schnidman, co-founder and chief executive of Prattle, a data analytics company that turns central bank speeches into signals that can be traded.
“Four weeks ago, there was no rational way I would have been able to say it was likely the Fed was going to raise rates,” says Mr Schnidman. “Now they’re back to being almost as hawkish as they were leading into their last rate hike.”
The growth in the frequency of policymakers’ statements, press releases and testimonies since 1998, when the Fed began communicating about rate moves publicly under pressure from Congress, has allowed Prattle to score communications by sentiment — from dovish to hawkish — and mine that data for indications of potential rate moves.
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The Prattle Team