• The cumulative effect from FOMC speeches raised the two-year yield by about five basis points, but for the year as a whole, the impact of speeches was more than offset by that of other forms of FOMC communications.

• In the first half of the year, speeches put some upward pressure on the two-year yield, while the effects of other communications were negligible.

• During the second half, speeches continued to put upward pressure on yields, but the impact was more than offset by the August FOMC statement.

Relative to 2010, our analysis of Fed communications in 2011 suggests that speeches played a smaller role in influencing the two-year yield. But there are some important distinctions.

• In 2010, FOMC speeches lowered the two-year Treasury yield by about 40 basis points cumulatively. Last year, the impact was to raise the two-year yield by five basis points.

• The smaller impact of speeches on yields doesn’t necessarily mean that the market wasn’t paying attention to Fed speeches. Indeed, the Committee appeared to be more divided than in 2010, and hawkish and dovish speeches may have largely offset each other.

• Lastly, there were fewer speeches last year than in 2010, and we excluded a larger proportion of speeches from our analysis because their timing overlapped with at least one other speech.

The winners of this year’s “Who Moved Markets” awards are…

• The “I Moved Markets Award” goes to St. Louis Fed President Bullard, who had a larger market impact than any other FOMC member. His speeches and interviews moved the two-year Treasury yield by almost 17 basis points last year.
• The “Power Player of the Year Award” goes to Philadelphia Fed President Plosser, for having the largest impact per speech.
• The “Market Neutrality Award” goes to Atlanta Fed President Lockhart, meaning that his speeches were about as likely to move yields higher as lower.