As we approach the annual Fed symposium at Jackson Hole later this week and Fed chair Janet Yellen’s scheduled speech on Friday, FTSE Russell looked back at US equity market index performance in the trading week following the last six conferences. The Fed’s annual late August Jackson Hole gathering has become a closely watched market event, to which market participants look for clues on the possible direction of US monetary policy and Fed outlook on the US economy.
Interestingly, since 2010 and during the transition from Ben Bernanke to Janet Yellen in 2014, the US large-cap Russell 1000® Index and the US small-cap Russell 2000® Index have consistently moved up in the trading week following the Fed Chair’s speech. In 2013 and 2015, when Bernanke and Yellen did not attend the conference and did not speak, US market indexes moved down in the trading week following the conference.
“Since the global financial crisis, Fed chairs have typically used Jackson Hole to lay the groundwork for monetary policy shifts that have taken the US market higher. In 2010, 2011 and 2012, Bernanke used this venue to provide details on the Fed’s quantitative easing campaigns. And, in 2014, Yellen focused on the US labor market as the signal for a possible interest rate increase. And, while a public speech by our US Fed Chair is just one factor influencing index values over time, US index levels after Jackson Hole in recent years suggest that markets prefer more specifics and certainty from our monetary policy makers.”
Fed Speak and US Markets:
Russell 1000 Index and Russell 2000 Index Returns in the Week Following Fed Symposium at Jackson Hole
|Year||What the Fed Chairs said|
|2014||Chair Yellen speaks about the dynamics of the US labor market and monetary policy, beginning to lay the groundwork and justification for the first rise in interest rates which occurred a year later.|
|2012||Chair Bernanke spoke about monetary policy since the onset of the financial crisis, reinforcing the benefits of the first two rounds of Fed easing and beginning to lay the ground work for a third round of quantitative easing, or “QE3.”|
|2011||Chair Bernanke spoke about the near- and longer-term prospects for the US economy, promoting growth over austerity. He pledged to help restore high rates of growth and employment in the US using all the tools at the Fed’s disposal.|
|2010||Chair Bernanke spoke about the economic outlook and monetary policy, setting the stage for a second round of quantitative easing, or “QE2,” saying the central bank “will do all that it can” to ensure a continuation of the economic recovery and that more securities purchases may be warranted if growth slows.|
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