ACTUAL
-0.3%
What the report says
THE GOLDEN RULE
Markets Trade Expectations, Not News
📰
Good News ≠ Price Goes Up
If the market already expected good news, the price may already reflect it. When the actual number comes in “good but not good enough”, prices fall. This is called buy the rumor, sell the news.
🏦
A Rate Cut ≠ A Weaker Currency
In 2024 the Fed cut rates three times. The dollar finished the year at a nine-year high, because markets had already priced in even more cuts. When fewer cuts came, the dollar strengthened.
❓
The Only Question That Matters
Do not ask: is this news good or bad? Ask: is this news better or worse than what markets already expected? That gap moves prices, not the headline itself.
RISK SENTIMENT
RISK-ON
RISK-ON: Investors Reach for Growth
Confidence is high. Money moves out of safety and into assets that need optimism to pay off.
| ASSET CLASS | TYPICAL MOVE | WHY |
|---|---|---|
| Equities | ↑ Up | Investors pay up for future growth when the outlook is calm |
| Commodities | ↑ Up | Stronger growth expectations lift demand for oil and industrial inputs |
| Government Bonds | ↓ Down (yields ↑) | Less need for safety, so bond prices fall as yields rise |
| US Dollar | ↓ Slightly down | Capital flows to higher-yielding, riskier markets abroad |
| Gold | ↓ Down | Safe-haven demand fades when fear is low |
RISK-OFF
RISK-OFF: Investors Rush to Safety
Fear takes over. Money exits anything uncertain and floods into what is perceived as safe.
| ASSET CLASS | TYPICAL MOVE | WHY |
|---|---|---|
| Equities | ↓ Down | Future earnings look less certain, so investors sell first and ask later |
| Commodities | ↓ Down | Weaker growth expectations reduce demand for oil and industrial inputs |
| Government Bonds | ↑ Up (yields ↓) | Investors pay a premium for safety, pushing bond prices higher |
| US Dollar | ↑ Up strongly | The dollar is the world's primary safe-haven currency |
| Gold | ↑ Up | The classic safe haven when trust in other assets falls |
ECONOMIC INDICATORS
Gross Domestic Product
GDP measures the total value of everything a country produces. It is the scoreboard for whether an economy is growing or shrinking.
GDP | HOW TO READ THE PRINT
CONSENSUS
+0.3%
What markets expected
VERDICT
MISS
Reality came in worse
A miss like this can hit stocks and lift safe havens, even if the number itself still shows some growth. The surprise is what moves the market, not the headline figure alone.
Consumer Price Index
CPI tracks how much prices for everyday goods and services are rising. It is the main gauge central banks use to judge inflation.
CPI | HOW TO READ THE PRINT
ACTUAL
3.8%
What the report says
CONSENSUS
3.2%
What markets expected
VERDICT
HOT
Inflation running above forecast
A hotter-than-expected CPI print raises the odds of higher-for-longer interest rates. That usually supports the currency and bond yields, and pressures equities.
Nonfarm Payrolls
Nonfarm Payrolls counts the net jobs added in the US economy each month, excluding farm work. It is the most closely watched US labour market report.
NFP | HOW TO READ THE PRINT
ACTUAL
130K
Jobs added
CONSENSUS
70K
What markets expected
VERDICT
BEAT
Labour market holding up
A strong beat signals a resilient economy, which can support the currency, but it may also reduce the chance of near-term rate cuts, which can weigh on stocks.
CENTRAL BANKS
Who Sets the Price of Money
Central banks move currencies, bonds and equities more than almost any other actor in this simulation.
THE FED
US Federal Reserve
MANDATE
Maximum employment and 2% inflation
WHAT TO WATCH
Sets the world's benchmark interest rate. Drives USD, UST 10Y and global risk appetite.
THE ECB
European Central Bank
MANDATE
Price stability across the Eurozone
WHAT TO WATCH
Sets EUR interest rates. Its decisions drive EUR/USD and German Bund 10Y.
THE BOE
Bank of England
MANDATE
Price stability and financial stability in the UK
WHAT TO WATCH
Sets GBP interest rates. Its decisions drive GBP/USD and UK gilts.
How a Rate Decision Ripples Through the Market
The chain: policy rate → yields → bond prices, stocks and currency
Hawkish = leaning toward higher rates, to fight inflation. Dovish = leaning toward lower rates, to support growth.
| MARKET | HAWKISH (rates up) | DOVISH (rates down) |
|---|---|---|
| Bond Yields | Yields rise | Yields fall |
| Bond Prices | Prices fall (inverse to yields) | Prices rise (inverse to yields) |
| Stock Market | Pressured (higher discount rate, cash competes harder) | Supported (lower discount rate, cheaper borrowing) |
| Currency | Strengthens (attracts yield-seeking capital) | Weakens (less attractive to hold) |
Remember the Golden Rule: it is hawkish or dovish relative to what markets already expected, not the move itself, that drives the reaction.
SAFE HAVEN ASSETS
Where Investors Hide When Fear Rises
🥇
Gold (XAU/USD)
No government can print more of it. Central banks have been buying it as they diversify away from the dollar.
🏦
US Treasuries
Backed by the US government. In a panic, investors accept a lower return in exchange for near-certain safety.
🇺🇸
US Dollar (USD)
The world's reserve currency. Demand for dollars typically spikes fastest and hardest when fear peaks.
🇨🇭
Swiss Franc & Japanese Yen
Backed by large current account surpluses and low debt. Traders borrow them cheaply and buy them back in a crisis.
YOUR TRADING TICKET
The 9 Instruments in This Simulation
Every period, you will take a BUY, SELL or FLAT position on each of these.
| INSTRUMENT | TYPE | WHAT BUY MEANS |
|---|---|---|
| EUR/USD | FX | BUY = expecting the euro to strengthen vs the dollar |
| GBP/USD | FX | BUY = expecting the pound to strengthen vs the dollar |
| USD/JPY | FX | BUY = expecting the dollar to strengthen vs the yen |
| US 10Y Treasury | BOND | BUY = expecting yields to fall (dovish Fed) |
| German Bund 10Y | BOND | BUY = expecting yields to fall (dovish ECB) |
| S&P 500 | INDEX | BUY = bullish on US large-cap stocks |
| Gold (XAU/USD) | CMDTY | BUY = expecting the safe-haven bid to rise |
| Silver (XAG/USD) | CMDTY | BUY = expecting industrial and safe-haven demand to rise |
| Crude Oil (WTI) | CMDTY | BUY = expecting oil prices to rise |