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19th January
2012
written by trader

The economy sector is very important when it comes to financial spread betting and there are four key areas which should be taken into consideration when discussing the topic. In the article the focus will be given on these areas all at a time. They include the following;

Liquidity

Liquidity is actually the measure of how fast a financial asset be it a share or a security is sold without huge impact on the prices or the value. Given the fact that liquidity offers a great share of trading activity, it is very suitable both from the organization level and the individual one. Liquidity focuses on converting assets to cash while they are still in the appropriate value and as much as this does apply critically to individual traders, even to companies it is very applicable.

Retail sales

There is no doubt by now that the impact of consumer spending in driving the economy is hugely significant. In many cases what the consumer spend and how much is very key in predicting the direction of the economy and the more the spending is the higher the chances of positive growth. Through the same assumption, market retail sales estimates are very significant in determining the market movements and the impact they have on the sectors that are doing well as well as those that are not.

The Non farm payrolls

Now the non farm payrolls are simply indicators that are used to denote the elementary wage for many industries that exist in a particular setting. The non-farm payroll is used to give a clear cut indication on the number of people who are unemployed or who are not working in paid employment. Furthermore the non-farm payrolls are used to indicate the people who are working, how much they are earning and the number of hours that they work per week. If there is wage inflation in the market, the interest rates will raise and the reverse is definitely true

Interest rates changes and dynamics

The fed funds rate is the standard determinant of interest rates in different sectors or areas of the economy such as mortgage, insurance, government bonds rates and others. In all these areas the fed funds have a very huge impact not just on the US markets but also on others such as the MPC monetary committee policies as well as the European central bank rates. However it is imperatively important to note that  the fed funds in the united states are used as the standard measure of all the interest rates in the world.

 

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