Finance

How will Juneteenth affect the stock and bond markets

The Juneteenth holiday commemorating the end of slavery in the U.S. is now a new federal holiday after President Biden signed a bill into law on Thursday afternoon, making it a holiday on a par with Memorial Day, Independence Day, Labor Day, and the 10 federal holidays.

The move comes after the House on Wednesday voted 415-14 to make it a national holiday.

The US Office of Personnel Management announced that most federal employees would get 18 June off as the 19 June holiday falls on a Saturday this year.

However, from a Wall Street perspective, there’s no guarantee that that day will immediately translate to a day officially recognised on Wall Street, if the Martin Luther King Jr. holiday is any guide.

Juneteenth, which is celebrated annually by many on June 19, is a day commemorating the end of slavery in the US in 1865. It was on that date that Union General Gordon Granger read the Emancipation Proclamation to African-Americans in Texas, roughly 2½ years after the proclamation was issued on 1 January 1863.

The Securities Industry and Financial Markets Association, a brokerage-industry trade group that recommends actions for the bond market, including recommending holidays for those who trade fixed-income assets like the 10-year Treasury and 30-year Treasurys, said that Juneteenth would be incorporated in its holiday schedule in coming years.

A 2019 statement that laid out Sifma’s closure policy referenced Fedwire, the central bank’s widely used payment processing system, as the key determinant for Sifma closures.

“If Fedwire is operational SIFMA won’t recommend a fixed income market close,” according to the statement.

The Sifma spokesman said that given that June 19 this year falls on a Saturday this year and the Fedwire remains open on Friday, therefore Sifma won’t recommend an early close on Friday.

A person familiar with the New York Stock Exchange, owned by the Intercontinental Exchange ICE, said Wall Street venues would need to convene, including Nasdaq, to determine a closure plan.

A Nasdaq spokeswoman said that all US markets operated by the exchange will remain open on 18 June, a big expiration of options and futures, and 21 June “to maintain a fair and orderly market and to minimise operational risks.”

“Nasdaq looks forward to engaging with industry participants and regulators regarding updates to future trading schedules and holidays,” the exchange said.

John Jacobs, executive director of the Georgetown Center for Financial Markets and Policy, said that it is about coordination for the exchanges.

“There will be a lot of conversations about how to recognize this holiday,” he said.

The former chief marketing officer of Nasdaq says that the exchanges need to set their holiday schedules and the Securities and Exchange Commission and the Commodity Futures Trading Commission need to weigh in to approve holidays on those venues. “The regulators would want to make sure that the coordination and plumbing is set up,” he said.

Meanwhile, Cboe Global Markets CBOE similarly said that it won’t be adjusting trading hours for its venues on Monday in lieu of the Saturday holiday, but is “supportive of this bill and looks forward to working with the industry.”

Of course, these trading platforms, which help to determine values in the Dow Jones Industrial Average, the S&P 500 index and the Nasdaq Composite Index, aren’t obligated to close just because a federal holiday has been declared.

For example, a market closure for King Junior’s birthday, honouring the slain civil rights leader, is a relatively new development. When the holiday was signed into law by President Ronald Reagan in 1983 and officially established in 1986, the NYSE and other major exchanges remained open, observing a minute of silence at noon.

It wasn’t until 19 January 1998, that the NYSE and Nasdaq first said they would allow for the full day off.

Jacobs said that the stock exchanges are all “about tradition,” noting that Good Friday, which isn’t a federal holiday, has long been observed on equity markets.

The Wall Street Journal notes that Juneteenth is observed at 9% of businesses, citing a survey conducted this year by employer consulting firm Mercer.

Last year, in the wake of a series of deaths of Black Americans, highlighted by the killing of George Floyd, a Black man, who died as a police officer knelt on his neck, Amazon.com named Juneteenth a day of edification, urging employees to attend “learning opportunities,” to recognize the end of slavery in America. Some other companies also gave employees the day off or recognized it in some way.

To be sure, there isn’t always holiday uniformity on Wall Street, and in the business community as a whole.

Veterans Day, which is meant to pay homage to US military servicemen and servicewomen, used to be celebrated by stock and bond markets alike, starting as far back as 1938 (some put the date to 1921). But over time that has changed.

This article was published by Dow Jones Newswire

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