Apr 28, 2023 10:06 UTC
Apr 28, 2023 at 10:06 UTC
AI tool created by JPMorgan analyzes Fed speeches to signal trades
The investment bank uses OpenAI’s ChatGPT to whiff out trading signals from Federal Reserve policy statements.
Investment banking mammoth JPMorgan has reportedly unveiled an artificial intelligence( AI) tool to dissect Federal Reserve statements and speeches to describe implicit trading signals.
On April 27, Bloomberg reported the Wall Street investment bank is using a ChatGPT- grounded language model to digest commentary from United States central bankers.
These Fed policy signals will be rated on a scale from easy to restrictive to decide what the bank has called a Hawk- Dove Score.
“ Hawkish ” is a financial policy term that refers to raising interest rates to keep affectation under control. The opposite is “ Dovish, ” which favors an expansionary financial policy and lower rates.
The AI tool will give judges a way to describe policy shifts that could give the bank a heads- up on trading signals. “ Primary operations are encouraging, ” JPMorgan economist Joseph Lupton reportedly said.
The tool can be used to prognosticate changes in central bank tightening. Hawkish policy statements for illustration could affect rising yields on one- time government bonds.
According to the JPMorgan model, which can dissect statements going back 25 times, Fed sentiment has changed lately but remains generally hawkish.
The Federal Reserve is anticipated to raise its standard interest rate by another 25 base points to 5.25% coming week, according to Bloomberg.
A 10- point increase in the Hawk- Dove Score indicates a ten percent chance that there will be a rate hike at the coming policy meeting and vice versa.
JPMorgan is keen on AI operations for its benefit but not so keen on letting its workers use them.
In February, the company confined its staff from using ChatGPT, according to reports. No particular incident prodded the decision to block workers from penetrating the AI chatbot and other enterprises have made analogous moves.
In an periodic letter to shareholders before this month, JPMorgan CEO Jamie Dimon revealed that the bank has over 300 AI use cases in product.