Investors Poised For Jackson Hole Conference
Federal Reserve Chair Janet Yellen is set to address the Federal Open Market Committee in Jackson Hole, Wyoming, on Friday morning at the annual economic summit.
Wednesday, August 20, 2014 - 00:00
Investors will be carefully monitoring Yellen’s speech in order to determine when interest rates are scheduled to rise. The highly anticipated keynote address will be Yellen’s first at the conference, and analysts expect the current dovish mentality will prevail.
Markets dip ahead of Fed minutes
At today’s opening, the NASDAQ, S&P 500 and Dow slipped as investors await release of minutes from the Federal Reserve’s most recent meeting. The details, to be released at 2:00 p.m., will offer further insight into the central bank’s plans for interest rate hikes.
The NASDAQ fell 0.15%, the S&P 500 dipped by 0.01% and the Dow is up 0.06%. Today’s figures follow a stronger showing yesterday, when all three indices experienced gains between 0.4% and 0.5%.
Following the trends
When former Federal Reserve Chair Ben Bernanke gave his Jackson Hole addresses annually from 2007 to 2012, the S&P 500 increased 1.3% on average on those days, Bloomberg reported.
However, Bernanke’s first ever speech in 2006 brought the index down by 0.1% on the day. It was the only time his speech had a negative impact.
Steven Englander, global head of G-10 foreign exchange strategy at Citigroup Inc., believes expectations going into the speech will color analysts’ interpretations.
“We worry that dovishness is increasingly anticipated and that by the time we get to her talk, anything less than ‘full dovishness’ will be a disappointment,” Englander told Bloomberg. He also asserted that the reiteration of the status quo “even accompanied by rhetoric and optimism, is hawkish because it suggests that normalization is coming as we get closer to the targets.”
Other analysts, like Stephen Lewis, chief economist at ADM Investor Services, hold that Yellen will not touch on monetary policy whatsoever, focusing instead on the labor market.
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