Open Market Operations and Financial Markets

This paper shows that since votes of members of the Federal Open Market Committee have been included in press statements, stock prices increase after the announcement when votes are unanimous but fall when dissent (which typically is due to preference for higher interest rates) occurs. This pattern started prior to the 2007–2008 financial crisis. The differences in stock market reaction between unanimity and dissent remain, even controlling for the stance of monetary policy and consecutive dissent. Statement semantics also do not seem to explain the documented effect. We find no differences between unanimity and dissent with respect to impact on market risk and Treasury securities.

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US rates rift will fuel financial market volatility

Emerald Expert Briefings ◽

10.1108/oxan-db246758 ◽

2019 ◽

Keyword(s):

Financial Markets ◽

Bond Markets ◽

Open Market ◽

Federal Open Market Committee ◽

Content Type ◽

Us Economy ◽

China Trade ◽

The Us ◽

Investment Grade ◽

Global Growth

Subject Financial markets outlook. Significance The decision of the US Federal Reserve (Fed) on September 18 to lower its main policy rate while not assuring investors that it will continue to loosen monetary policy is exposing divisions within the Federal Open Market Committee (FOMC), and between the Fed and bond markets. The ‘hawkish cut’ came with three dissensions, reflecting the disconnect between the resilient US economy and the deterioration in the global growth outlook. Impacts Cautious investor optimism that a US-China trade truce will be struck is fuelling US equity gains, but a substantial deal seems unlikely. The Brent oil price fell back within days following the drone attacks on Saudi Arabian oil facilities, but more short spikes are possible. Almost one-third of investment-grade government and corporate bonds are negative yielding; those with zero lifetime coupon are riskiest.

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Shaping Expectations and Coordinating Attention: The Unintended Consequences of FOMC Press Conferences

Journal of Financial and Quantitative Analysis ◽

10.1017/s0022109018001357 ◽

2018 ◽

Vol 54 (6) ◽

pp. 2327-2353 ◽

Cited By ~ 16

Author(s):

Oliver Boguth ◽

Vincent Grégoire ◽

Charles Martineau

Keyword(s):

Financial Markets ◽

Risk Premium ◽

Public Information ◽

Relevant Information ◽

Unintended Consequences ◽

Open Market ◽

Investor Attention ◽

Federal Open Market Committee ◽

Market Risk Premium ◽

The Social

In an effort to increase transparency, the chair of the Federal Reserve now holds a press conference (PC) following some, but not all, Federal Open Market Committee (FOMC) announcements. Evidence from financial markets shows that investors lower their expectations of important decisions on days without PCs and that these announcements convey less price-relevant information. Correspondingly, we show that investors pay more attention to upcoming announcements with PCs. This coordination of attention can reduce welfare in models of the social value of public information. Consistent with theories of investor attention, the market risk premium is larger on days with PCs.

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AUSTRALIAN RESOURCE DEVELOPMENT - CAN FINANCIAL REQUIREMENTS BE SATISFIED?

The APPEA Journal ◽

10.1071/aj81011 ◽

1982 ◽

Vol 22 (1) ◽

pp. 159

Author(s):

D. R. P. Grehan

Keyword(s):

Financial Markets ◽

Foreign Investment ◽

Resource Development ◽

Foreign Ownership ◽

Open Market ◽

Project Development ◽

Foreign Partner ◽

Self Sufficiency ◽

Tangible Support ◽

To Receive

While it is of the utmost importance to maintain Australia's existing level of self-sufficiency in the production of oil and its related products, this industry receives very little tangible support for its endeavours in this regard. When the participants in the industry require finance, particularly for project development, they find that they have to compete on the open market for the necessary funds. In the coming decade there will be very heavy demands placed on the financial markets in this country, particularly from the minerals area where huge amounts of capital will be required. Additionally, we can expect certain sectors of the community to receive favoured treatment at the expense of the more efficient sectors.During the mineral boom of the early 70s the percentage of foreign ownership of Australian resources increased. During the 80s it appears that the reverse may be the case, as greater Australian participation in the development of this country's resources may be required. Accordingly it may be more difficult to have the Foreign Investment Review Board approve an application from a possible foreign partner who is willing to inject capital into a project.These possible restrictions on fund raisings may result in delays for many projects and could well cause the cancellation of others which are now marginally feasible.

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POKRIVENE OBVEZNICE: NOVA ŠANSA ZA OPORAVAK TRŽIŠTA KAPITALA U SRBIJI

Facta Universitatis Series Economics and Organization ◽

10.22190/fueo1704359m ◽

2018 ◽

pp. 359

Author(s):

Vladimir Mirković ◽

Jelena Lukić

Keyword(s):

Financial Markets ◽

Market Economy ◽

Capital Market ◽

Stock Exchange ◽

Transition Process ◽

Open Market ◽

The European Union ◽

Prospective Development ◽

Increasing Trend ◽

Further Development

At the beginning of the XXI century, Serbia entered into transition process toward open market economy. One of the segments which should be developed in accordance with market economy principles was financial markets, more precisely capital market. Recovery of the Belgrade Stock Exchange and increasing trend in the first half of the XXI century gave optimism in prospective development of the Serbian capital market. Unfortunately, Serbian capital market did not make expected progress. In this paper, the situation on the Belgrade Stock Exchange is analyzed, trading with equity and debt instruments, emphasizing deficiencies which caused insufficient level of development of the Serbian capital market. As many opportunities for growth have been missed and capital markets are at the stagnant level for years, there are new, sophisticated products which could give an impulse to further development of financial markets. An example of such products is covered bonds, type of debt instruments with widespread use in the European Union. In this paper the main characteristics of those products are elaborated with experiences in other countries that could be very useful for Serbia.

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New bonds support Greek exit from bailout in 2018

Emerald Expert Briefings ◽

10.1108/oxan-db223873 ◽

2017 ◽

Keyword(s):

Financial Markets ◽

Bond Markets ◽

Open Market ◽

Content Type ◽

International Media ◽

Track Record ◽

Financing Costs ◽

The Government ◽

Greek Banks ◽

Of Greece

Subject Greece’s return to bond markets. Significance After three years of market exclusion, the Greek state has issued five-year debt totalling 3 billion euros (3.5 billion dollars). The placement was hailed as success by the government and international media as the first step towards rebuilding Greece's track record in the open market. The new debt issue also solidifies hopes of Greece exiting its third bailout programme as planned in August 2018. As open market issuances carry greater financing costs than funding obtained from Eurogroup, the Greek government will largely use them to smooth the debt repayment profile and for publicity purposes. Impacts The return to financial markets represents a political victory for the Tsipras government. The successful new debt placement will improve the government’s negotiating position with international lenders. The government debt placement will establish a benchmark for further issuance from Greek banks and corporates.

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