SOURCE: Russell Investments

Russell Investments

August 30, 2012 09:49 ET

Russell Indexes: Bernanke's Jackson Hole Speech -- Global Market Anticipation & Reaction

SEATTLE, WA--(Marketwire - Aug 30, 2012) - Russell Indexes analyzed the short- and long-term effects on the global equity market performance following the comments of U.S. Federal Reserve Bank Chairman Ben Bernanke at the last two Economic Policy Symposiums at Jackson Hole, Wyoming. Russell found that the markets, as defined by the Russell Global and the Russell 3000® Indexes, consistently performed well in the near-term following his speech in anticipation of the later introduction of influential policies.

"The dynamics of the upcoming 2012 September FOMC policy meeting, where committee members will be making individual forecasts including views on the federal fund rate, work against a pre-emptive policy announcement at Jackson Hole this year," said Mike Dueker, chief economist with Russell Investments. "The jump in the markets that occurred immediately following Bernanke's annual Jackson Hole remarks the last two years was a result of his highlighting specific policy measures the Fed would take. Since it is unlikely there will be any specific measures discussed to the degree that they were in recent years, we do not expect to see equities having an immediate boost as in past years, but we will be interested to see what follows the FOMC Meeting on September 13."

  • In the last two years, global equity markets have performed positively for the five trading days including and following Bernanke's speech, as illustrated by returns of the Russell Global and the Russell 3000® Indexes.

  • Following Bernanke's speech on August 27, 2010, where he introduced the concept of QE2, global equity markets showed a strong improvement for the remainder of the year, relative to YTD leading into Jackson Hole.

  • Global markets showed a strong improvement for the remainder of the year following Bernanke's 2011 Jackson Hole speech relative to the YTD leading into Jackson Hole, though not as pronounced of an improvement relative to a similar time frame the year before. In Bernanke's 2011 speech, he announced that the planned September FOMC meeting would be extended to two days. It was at this meeting that the details of Operation Twist were outlined.

             
Russell Indexes   Returns Before Bernanke's Speech
(Jan 1, 2010-Aug 26, 2010)
  Returns After
Bernanke's Speech
(Aug 27, 2010-Dec 31, 2010)
  Return Five Trading Days After Bernanke's Speech
(including Speech Date)
 (Aug 27, 2010- Sep 2, 2010)
Russell Global Index   -4.6%   20.8%   3.9%
Russell 3000 Index   -4.5%   22.5%   4.4%
             
Russell Indexes   Returns Before Bernanke's Speech
(Jan 1, 2011- Aug 25, 2011)
  Returns After
Bernanke's Speech
(Aug 26, 2011-Dec 30, 2011)
  Return Five Trading Days After Bernanke's Speech
(including Speech Date)
(Aug 26, 2011-Sep 1, 2011)
Russell Global Index   -9.2%   1.7%   4.7%
Russell 3000 Index   -7.6%   9.3%   4.3%
             

Source: Russell Investments

The Russell Global Index includes more than 10,000 securities in 48 countries and covers 98% of the investable global market. All securities in the index are classified according to size, region, country and sector. Daily Returns for the main components are available here: http://www.russell.com/indexes/data/daily_total_returns_global.asp

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