Reaction map
Definition · Level 8 · Rates, FX & macro
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The typical first reaction when inflation is the focus: a hot print lifts the 2-year yield and the dollar and often lowers stocks and gold; a cool print does the reverse. Typical, not a rule.
Example
Cool inflation number: 2y yield −10 bp, dollar down, stock futures up.
Where Tradecraft teaches it
Level 8 · Rates, FX & macro, in the lesson “Macro data: how markets react”: The reaction map, why good news can hurt stocks, and the words for inflation and growth regimes.
Related terms
- DeflationA sustained fall in the general price level (consumer prices lower than a year ago).
- DisinflationInflation that is slowing: prices still rise, but at a lower rate.
- Good news is bad newsMarket regime where strong economic data hurts stocks because it implies higher rates for longer: higher yields and discount rates outweigh the…
- InflationA sustained rise in the general price level, eroding the purchasing power of money and of fixed coupons.
- StagflationStagnant or shrinking growth and rising unemployment combined with high inflation — the worst mix for a central bank, since fighting prices deepens…
- Technical recessionRule of thumb: two consecutive quarters of negative real growth in gross domestic product (GDP).