Why have markets grown more captivated by data releases?

EIGHT-THIRTY in the morning on the first Friday of every month is a special time for bond traders: it’s when America’s Bureau of Labour Statistics usually releases its monthly jobs data. Despite the vast sums that some hedge funds spend on alternative data, landmark releases such as the employment report or the consumer-price index (CPI) can still convulse markets. When the September payrolls numbers, released on Oct 4, blew past expectations, bond yields jumped by eight basis points. Stocks spiked, too, though the move was short-lived.

News has always driven markets, but curiously the importance of big data releases has grown substantially in recent years. Analysis by The Economist finds that, over the past year, bond-market moves in America have been twice as large on days with major data releases or Federal Reserve decisions as on other days, while equity-market moves have been two-thirds larger. In both cases, these were substantially above the historical norm.

Why, then, have markets decided to take hard facts much more seriously? Part of the story is probably that the global economy has been so bizarre in recent years: a pandemic, vast fiscal stimulus, a war-fuelled spike in commodity prices. When events are so far outside the historical norm, the impulse to latch on to the certainty of new data is understandable.