Rumors started to swirl concerning the nomination for the next Federal Reserve Chairperson a little over a week ago.* Would President Biden nominate the current Fed Chair Jerome Powell for another term, or would he go to the more dovish Democrat Lael Brainard?
S10Y 10YR Treasury Yield Index
Interest rate markets, which the Fed has significant influence over, were likely expecting another term for Powell given that Treasury yields fell several basis points following even the mention of Brainard in the interview process. Though further developments in this story will be important for the future of the US economy at large, most traders were seeking the answer to just one question as the news broke: Are Yields a Buy or Sell?
A Logical Approach to Trading the News
It might seem simple, but asking how much a news item actually matters can be a solid way to start your research. Allegedly, yields fell because President Biden interviewed a dovish Fed Governor, a supporter of monetary expansion and thus low interest rates, for the next Fed Chair appointment.
Though the Fed Chair may hold considerable sway, most actions from the Federal Reserve or Federal Open Market Committee require a vote from a mix of the Board of Governors, of which there are seven, and the regional Federal Reserve Bank Presidents, of which there are twelve.
After checking your platform, did markets shift enough during past Fed appointments to warrant the activity seen amid news of the potential for a new Chairperson?
Sure, this opportunity to trade the news has come and gone, but there are hundreds of news items posted daily covering the multitude of asset classes at your disposal. Open your search engine and trade platform, and go get ‘em!
*Biden meets with Fed leaders Powell and Brainard as nomination decision nears” from cnbc.com 11/5/21
**Info available at federalreserve.gov
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Source: https://www.danielstrading.com/2021/11/18/what-news-moves-the-market
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