1. There is great correlation between changes in the fed rate and the RTS index?
The correlation between changes in rates by the fed and the situation in the Russian stock market (and, respectively, and the RTS index), certainly exist, and the relationship of changes in global stock market.
The table systematized the results of the actions and statements of the chairmen of the fed on the dynamics of stock indexes. On a blue background shows the negative red — positive.
The dates on the horizontal axes of the graphs in Fig. 1 to 5 include the dates of relevant actions by the fed.
To tighten the monetary policy by the fed, investors respond definitely — decreased activity in stock markets.
| Date | The substance of the actions or statements of the Chairman of the U.S. Federal reserve | Changes in stock indices (foreign) | Change in equity indices (Russian) |
| 5.12.1996 | Greenspan: “irrational euphoria” in the stock market, leading to exorbitant inflated the value of assets | Nikkei: falling 3.2%; DAX: -4%; FTSE 100:-4%; Dow Jones:-2,3% (the next morning ). | RTS: — 3,15% |
| 4.09.1998 | Greenspan: the willingness to significantly cut interest rates because the United States cannot remain an “oasis of prosperity” in a world affected by the financial crisis | DJ: +4,98%; Nikkei: +5.3 percent; FTSE 100: +3,5%; MSCI Emerging Markets: +4,6%. | RTS: + 9,8% |
| 10.05.2006 | Increasing the discount rate by 0.25% | RTS: — 0,6% | |
| 5.07.2006 | Bernanke: inflation to exceed the level that corresponds to the concept of price stability, the fed would be “vigilant” to ensure that they do not become the norm | DJ: -1,8%; European Dow Jones Stoxx 600: — 2%; | RTS: — 4,7% |
| 29.08.2006 | The publication of the minutes of the August meetings of the fed, suggesting the constancy of the discount rate in the near future | RTS is + 0.6% |
2. From the point of view of the history of the issue: is there a correlation between the fed rate and the Russian market in the long-time or is it sporadic and mostly negative phenomenon? Roughly speaking, this factor is fundamental or technical?
In panels (1-5) show the behavior of the RTS Index during the days of the statements of the fed.
Fig. 1.
Fig. 2.
Fig. 3.
Fig. 4.
Fig. 5.
Tags: financial center , USA , Exchange , finances , threat
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