An employment report shows strong hiring. Financial markets can remain calm when the result is close to what investors already expected, because much of the information was effectively reflected in prices before the release even arrived. According to Unconventional Levers by Dr Uppiliappan Gopalan, this is one of the most counterintuitive truths in financial markets.
Same Number, Completely Different Reaction
A company can report excellent profits and still see its share price fall because investors expected even more. Inflation can decline and still produce disappointment when markets had prepared for a larger improvement. The economic outcome can be identical while the market reaction is dramatically different, purely because of the gap between expectation and reality.
Why Central Bank Wording Can Move Markets More Than Numbers
An interest rate decision that matches broad expectations may produce limited movement, while a small change in wording can trigger significant repricing when investors read it as evidence that the future policy path has changed.
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