Which Fed Members Move Markets Most?

Reported by Steve Leisman, written by Michelle Lodge
Ben Bernanke

The envelope, please! When it comes to all the Fed-speak, who should you listen to? How much do they move markets and, most importantly, in which direction?

Former Federal Reserve Governor Larry Meyer annually publishes his report "Who Moves Markets" that you could call the cliff note version for the tomes of speeches and testimony issued members of the Federal Reserve's rate-setting Open Market Committee. The criteria: how much they moved the two-year note within 2 hours and 15 minutes of the speech.

Now, the awards for 2009.

Like Michael Jordan winning an MVP award, Meyer's award for the official who moved markets most went to Fed Chairman Ben Bernanke. He gives more speeches and signals policy changes more meaningfully than anyone else.

But a couple curious people end up a distant second and third: Philly Fed President Charles Plosser and Dallas President Richard Fisher. Turns out Fisher is there because he just gives a lot of speeches. More interesting is Plosser, a well-known hawk on the committee, who has fought for higher interest rates.

Plosser received Meyer's "Power Player of the Year" award, because he has the most impact on rates per speech. Meyer said Plosser’s designation was due to his timing and clarity. "He was one of the earliest to be extremely clear and forceful with the view that the Fed should tighten sooner, rather than later," Meyer said. (Watch CNBC's most recent interview with Plosser here).

Fed's Plosser: Premature to Consider Rate Hikes
Fed's Plosser: Premature to Consider Rate Hikes

So in what direction did Fed speakers move markets? Curiously, San Francisco Fed President Janet Yellen, known for being a dove, raised rates more per speech than any other committee member.

She was followed by Plosser and Thomas Hoenig of Kansas City, who has taken to talking more and talking more hawkishly about a need to raise rates.

My personal award for the "Biggest Dove Award" goes to Fed Vice Chair Donald Kohn, who managed to reduced yields on two-year notes by nearly 4 basis points on average per speech. Kohn is often a curtain raiser for comments to be made later by the Fed Chairman.

And, my award for "Talked the Most, Said the Least" goes to Sandra Pianalto. On average, she had absolutely no effect at all on rates.

So the study gives us an easy short-cut to know whom to listen to: Follow every word by the Chairman and don't miss comments by Kohn or NY Fed President Bill Dudley.

Follow Yellen, Plosser and Hoenig. The effect of their speeches on markets has been at odds with the direction of policy. But follow them because they are obviously followed by markets.

If you're looking to cut corners and maybe get out of work early one day, take a pass on Fisher and Pianalto.