Humans no longer 'interpret' economic news; bots have already decided what it means before you've finished the headline.
April 16, 2026
Original Paper
High-Frequency Monetary Policy Shocks: What are Markets Learning?
SSRN · 6458741
The Takeaway
We like to think of markets as groups of people 'digesting' news from the Fed. But this research shows that 'price discovery' now happens in mere milliseconds through mechanical arbitrage. High-frequency algorithms settle the market's reaction to monetary policy shocks so fast that human 'interpretation' is essentially irrelevant. The market doesn't 'think' anymore; it just reacts to patterns. This means that by the time you hear the news on TV, the entire economic impact has already been hardcoded into the prices. For the average investor, it’s a reminder that you're not playing the same game as the machines—they aren't reading the news; they're just calculating the physics of the announcement.
From the abstract
Using tick-by-tick data for Federal Funds and Eurodollar futures, I document the high-frequency price discovery process following FOMC announcements. I find that price discovery often occurs almost instantaneously - frequently within seconds of the release - even for late-maturity futures, suggesting that mechanical arbitrage plays a significant role in determining futures prices around announcements. In contrast, announcements concerning unconventional policy, which typically require more inten