Global stocks soar on dovish Fed, strong United States jobs data

Global stocks soar on dovish Fed, strong United States jobs data

Powell called the jobs report "very strong" and said he was also encouraged by the rise in the labor force participation rate and gains in wages, which he said "for me at this time does not raise concerns about too high inflation". "Can we wait?" Mester said.

Powell also addressed the issue that the central bank was overusing interest rate policy in an effort to prevent the economy from overheating.

Equities all over the globe had experienced a rally on Friday, the 4th of December, after steep declining earlier this week, as trade-talk hope signaled a relief for the investors and dovish Fed helped to overhaul market momentum, as Fed Chair Jerome Powell had said that the U.S. central bank would be patient with the monetary policy.

The message was heard on Wall Street, where major stock indexes surged about 3.5 percent to a more than two-week high. The Fed said in December it anticipated raising rates twice in 2019. But some investors have anxious that that process could push long-term rates higher at a time when the economy was slowing.

That formulation was a lot less clear than just over two weeks ago, when Powell highlighted policy-maker projections of two rate increases this year, on top of the four in 2018, and said he didn't see the Fed changing its balance sheet plans.

Powell's appearance in Atlanta was his first since last month's rate increase and a public lashing from Trump, who according to sources asked aides about his power to fire the Fed chairman. Under the law that governs the Federal Reserve, a president can only remove a Fed chairman for cause.

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He also defended his independence, saying he would not resign if requested Donald Trump asked. "We are always prepared to shift the stance of policy and to shift it significantly" if needed.

"I found it actually quite surprising how benign markets were for such a long time, despite the risks of trade wars and other things that were going on", Bernanke said in an observation that's shared privately by some Fed officials.

When asked where the smart money would go - would it go to China after the warning Apple gave or would it chase developed markets after the jobs report, he said, "The smart money will be rethinking this whole idea that the global economy is slowing down and my guess it want take much to get the risk on trade back in play again".

The Fed's tightening cycle includes both rate hikes and the gradual shedding of its more than $4 trillion in assets. But she said the turbulence may also stem from a different view of the economy than that shared by many Fed officials who feel confident US growth will remain on track for the next year, with labour markets still strong.

"Longer-term bonds have sold off here today in price", said Tim Ghriskey, chief investment officer at Inverness Counsel in NY.

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