JPMorgan's AI Tool Predicts Trades from Fed Speeches!
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JPMorgan's AI Tool Predicts Trades from Fed Speeches!

written by John Murphy | April 28, 2023

According to recent news, the investment bank utilizes Open AI’s ChatGPT to drive out the trading signals from the Federal Reserve policy statements.

JPMorgan, an investment banking giant, reveals an Artificial intelligent tool. This JPMorgan’s AI Tool analyzes speeches to detect potential trading signals and Federal Reserve statements.

Key Takeaways:

  • JPMorgan uses AI tools to analyze Fed statements for trading signals.
  • The tool assigns a Hawk-Dove Score to Fed policy signals.
  • JPMorgan’s model can evaluate statements going back 25 years.
  • AI tools help detect policy shifts and provide trading signal suggestions.
  • JPMorgan limited ChatGPT tool used by employees in Feb. CEO revealed 300 AI use cases in production.

Bitcoin Sahi Hai took to Twitter and made JPMorgan determined to use AI. To analyze the FED statement, JPMorgan created the ChatGPT ai-powered tool. It restricted the use of AI chatbots by its staff.

Bloomberg highlighted on 27 April that the Wall Street investment bank is using a ChatGPT-based language model. This model aims to digest the comments from central bankers of the United States.

Moreover, to drive What the bank has called a Hawk-Dove Score, rated these Fed policy signals from easy to restrictive.

To keep inflation under control, a monetary term refers to raising the interest known as “Hawkish.” The opposite of Hawkish is Dovish. Dovish favors lower rates and an expansionary monetary policy.

Debut Infotech took to Twitter and made an announcement the investment bank used OpenAI’s ChatGPT to mine Federal Reserve’s Policy pronouncement for trading signals.

Analysts use AI tools to detect policy shifts. This move provides suggestions to banks regarding trading signals. Joseph Lupton JPMorgan economist stated that preliminary applications are encouraging.

Furthermore, an AI tool can use to predict the changes in central bank tightening. For example, Hawkish policy bonds raise yields on one-year government bonds.

JPMorgan model can evaluate the statement going back 25 years. Recently Fed sentiments fluctuated but remain primarily hawkish according to the JPMorgan model.

According to Bloomberg, next week, the Federal Reserve will increase its benchmark interest rate by 25 basis points to 5.25% took to Twitter and made an announcement that JPMorgan created OpenAI’s ChatGPT to investigate Fed speeches to signal a trade.

In the Hawk-Dove Score, a 10-point increase means a 10% chance to raise the rate at the next policy meeting and vice versa.

JPMorgan is eager on AI applications for its benefit. But it is not that eager that it allows its employees to use these applications.

According to reports, the company limited the use of the AI tool ChatGPT to its employees in February. No specific incident restricts the employees from using AI chatbots. Other companies also make the same move.

Recently this month, CEO Jamie Dimon revealed in an annual letter that 300 AI use cases of banks are in production.