Introduction and Literature Review
The predictive significance of various securities types and indexes concerning FFRC has been a growing interest in financial discourse. Traditionally, economic theory has centered on critical variables such as the inflation rate, GDP per capita (or GDP growth rate), and the unemployment rate as primary determinants influencing FFRC. However, recent inquiries have expanded the scope of analysis to include securities types and indexes, recognizing their potential to provide valuable insights into forthcoming shifts in monetary policy. (Hamilton 2007) laid a foundational framework in this area with his study on “Daily Changes in Fed Funds Futures Prices,” which investigated the predictive power of long-duration treasuries, previous employment growth, and daily futures prices in estimating FFRC. This research demonstrated the potential of financial market indicators beyond traditional macroeconomic variables in forecasting monetary policy decisions.
Building upon Hamilton’s work, this study aims to delve deeper into the predictive significance of securities types and indexes by broadening the scope of analysis to encompass a more comprehensive array of financial instruments and securities indices. It seeks to enhance understanding of the complex relationship between financial markets and macroeconomic variables on FFRC. Expanding perspectives contribute to more diverse forecasts of FFRC and facilitate enhanced portfolio management and fund policy formulation strategies.
Through empirical analysis and refinement of existing methodologies, this research endeavors to offer insights into the dynamics of monetary policy and its broader implications for the economy by incorporating insights from both traditional economic indicators and financial market data, aiming to provide a comprehensive understanding of the factors influencing FFRC and their impact on financial market behavior.
Jarad Ponce 