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Fed Policy may Turn Traders into Data Junkies

Stocks and bonds have always responded to the latest economic data releases. But with the Federal Reserve potentially set to hike rates as early as June, the markets’ data dependency could degenerate into a full-out data addiction.

It’s not that investors have suddenly taken a greater interest in the growth rate of the economy. Rather, since the general trend of growth puts the Fed on pace to hike raise, each individual data point is starting to take on a greater import.

Some even suggest that this is by design. That is, the Fed may be creating a deliberate show of tying policy to data, in order to slowly reacquaint the market with volatility after years of quiescent gains.

CNBC [1]

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