Central banks have a profound impact on financial markets, and investors struggle to keep informed about their complex policy decisions. Technological and financial developments have transformed the US Federal Reserve Bank from a financial black box into a vocal, increasingly transparent institution-and the result is such a wealth of textual data that clues to future policy decisions may be lost among the details.This book presents a solution to this problem by keeping track of those details. Schnidman and MacMillan demonstrate how the latest advances in automated text analysis, combined with the precision of domain expertise, are the keys to understanding how central banks move markets with their words. The authors outline a method to not only examine every piece of every central bank communication, but to do it in a way that is completely comprehensive and unbiased while quickly yielding hard, quantitative data that can be put to work in modern financial models.

PART I: EMERGENCE AND EVOLUTION: THE STORY OF THE FED1. Origins: From Chaos to Structure2. Independence: Wars, Depression, and Politics3. Centralization: The Rise of Technology4. Transparency: Data Meets DemocracyPART II: FED WATCHING: SENTIMENT ANALYSIS AND DATA DRIVEN INVESTING5. The Briefcase Watch: Fed watching at its Finest?6. Data Driven Watching: Comprehensive, Unbiased, and Quantitative 7. Fixed Income Investing: Fed Sentiment Drives Bonds8. Equity Market Investing: Macro Matters9. Forecasting Policy: Market Response to Fed Communications Trends10. Forex Investing: Central Bank Sentiment Data across the GlobePART III: GLOBAL MONETARY POLICY: ANALYZING CENTRAL BANKS AROUND THE WORLD11. ECB Sentiment: Decoding a Complex Monetary Union12. BOE Sentiment: The Origin of Modern Central Bank Communications 13. BOJ Sentiment: Monetary Clues in Lost Decades14. RBA Sentiment: Australia as a Proxy for China 15. Global Sentiment: International Central Bank Transparency