Key Takeaways from the Federal Reserve paper:
"@Kalshi and the Rise of Macro Markets"
The Fed just published a 41-page working paper evaluating Kalshi as a macro forecasting tool.
They compare prediction markets to:
- Fed funds futures
- Secured Overnight Financing Rate (SOFR) options
- Bloomberg consensus
- Blue Chip surveys
- Survey of Market Expectations (SME)
- Survey of Professional Forecasters (SPF)
1. Real-time, full distributions
Surveys give point forecasts. Infrequent. Often stale.
PMs give:
- Continuous updates
- Full probability distributions
- Intraday reactions to news
- Density