The FED Drift

What is the FED drift strategy?

The FED Drift strategy is that global equity markets will rise before the FOMC meeting. The idea was presented in detail by David O. Lucca and Emanuel Moench in their paper “The Pre-FOMC Announcement Drift” in September 2011.

What is the Fed?

The Federal Reserve System (FED) is the central bank of the United States of America. Founded in 1913, the Fed has played an important role in controlling the money supply and regulating the U.S. economy.

One of the Fed’s main tasks is to keep inflation in check by controlling the money supply. It does this through the use of various instruments such as Open Market Operations, Discount Rate and Reserve Requirements.

Another important goal of the Fed is to maintain a stable economy by monitoring the labor market and economic growth. If the economy is slow, the Fed can take action to promote growth, while if the economy is running too hot, it can take action to prevent overheating.

The Fed also works closely with other government agencies and international organizations to maintain a stable and effective financial community.

Although the Fed operates independently, it is nevertheless overseen by Congress. However, their decisions and actions have far-reaching implications for the U.S. economy and financial market.

As a result, it is important to understand the role and purpose of the Fed in order to gain a better understanding of the U.S. economy and financial market.

How can you benefit from the FED drift strategy?

To benefit from the pre-FOMC announcement drift, we buy the night before the FOMC decided the S&P 500. We held this position for a total of 24 hours until the decision was made.
Implementation could be achieved with a Future (e.g. ES or MES) or Contracts for Difference (CFD`s).

How many FOMC meetings are there per year?

There are eight FOMC meetings per calendar year. One takes place every 6 weeks. However, there may also be unscheduled meetings, which are held as needed to discuss current financial and economic developments. As a rule, FOMC meetings last only one day. In June, July, January and February, the sessions last 2 days. It presents more long-term projections of GDP, unemployment rate and inflation rate for the year. A statement is issued by the FOMC after each scheduled central bank meeting, summarizing the committee’s current economic assessments and any monetary policy decisions made at the meeting. Four times a year, the chairman of the committee holds a press conference after the FOMC meeting. He presents the FOMC’s economic projections and explains the context in which monetary policy decisions were made. Full FOMC meeting minutes are published no later than 3 weeks after each meeting.