Why Does the Stock Market Remain Open While the Bond Market Closes for Veterans Day?

Daniel Banas  |

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Veterans Day is a national holiday reserved to honor and thank those who have or are currently serving in the U.S. Armed Forces. We at equities.com would like to thank all veterans for their service!

But interestingly enough, while Veterans Day is an opportunity for some on Wall Street to take a moment to rest due to the unofficial closing of the bond markets, you won’t be seeing every trader taking the day off to spend with their families – or maybe more realistically, at the racetrack. Is it because Wall Street traders are perhaps not known for taking much time for deep introspection as the speed and rigors of the market simply don’t allow for it? Whatever the case, while the bond market is closed, the stock market is still very much open. So why exactly does that happen?

A Financial History of Veterans Day

One possible reason is that Veterans Day began as Armistice Day, which is still celebrated in other parts of the world to mark the anniversary of the end of World War I. However, in 1954 President Eisenhower signed a bill that officially established the holiday as Veterans Day, thereby extending the day into a celebration of everyone who has served in the U.S. Armed Forces.

Since then, the date has changed a few times – for several years the holiday fell on the last Monday in October – which might partially explain why only certain markets observe the holiday. Further still, since November 11th is a different day of the week every year, it can be difficult to keep track of the day – it doesn’t offer the guaranteed three-day weekend of Memorial Day or Labor Day.

Perhaps the most likely reason though, is the potential for leaving money on the table – a highly unpleasant thought for most traders. In finance, when a holiday that falls in the middle of the week – like this year, for instance – it can have a significant effect on the markets.

Particularly as trading has become faster than ever (down to the microsecond), the thought of taking a full day off of trading likely doesn’t sit well with financial leaders. From 1954 to 2006, Wall Street actually observed Veterans Day with a two-minute shutdown, but in today’s world of lightning fast-trading, two minutes could cost billions.

An Unofficial Observance

Since the U.S. Treasury is closed on the Federal holiday, a large and important indicator of bond trading is unavailable on today’s holiday, so effective bond trading isn’t particularly feasible on Veterans Day, even if a trader wanted to. Thus, the unofficial bond market shutdown. The market for bonds is never officially closed, but traders observe it anyway. Even if they’re not able to take the time to be with family or visit the Vietnam Veterans Plaza in NYC, perhaps the slower day will give traders a few extra minutes to reflect on the service of our veterans who have helped make free markets possible.

This article was originally published November 11, 2014.

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