The moves follow a better-than-expected job report that showed that 312,000 jobs were created in December, with the unemployment rate rising to 3.9%, as more workers entered the workforce. "We don't believe our issuance is an important part of the story", he said. "Powell is definitely trying to calm the markets".
Powell's comments alleviated some worries that the Fed's course of monetary tightening may be too aggressive in the event of an economic slowdown. This caused investors to dump higher-yielding stocks, raising stock market volatility and driving investors into the safe-haven Treasurys.
"No, I have not", the Fed chairman said.
"The upcoming earnings season will likely see managements reset 2019 earnings expectations to something close to flat versus 2018", said Colas in note on Friday, adding that stocks could push higher in the year even if January is a month of losses.
The President has repeatedly criticized the Fed's increasing monetary restrictions and interest rates, which he blamed for the market drop in a phone call with Fox News host Shannon Bream in October. That flexibility, he added, applied as well to the monthly reductions to the Fed's balance sheet. "We're hearing a lot from different groups of people about the role the balance sheet normalization may be playing in the market", Powell said.
Many analysts are girding for a rocky year for markets, owing to the US-China trade war and other unresolved matters, including a government shutdown fight in Washington that President Donald Trump warned Friday could last years as he battles for funding for a border wall with Mexico.
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Overall, she said she felt the Fed was in a "really good spot".
Asked if he would resign if Trump asked him to do so, Powell responded with a short "no".
Powell triggered an acceleration in the selling pressure when he said, "As always, there is no preset path for policy". "The Fed has wilfully ignored trade and interest rate risks while talking a hawkish game". "On the other hand the economic fundamentals and today's labour market report supports a view that the US economy is still on sound footing". But it has been gradually reversing that stance over the past year, although the balance sheet still remains above $4 trillion.
"However, this idea that has been percolating in the market that round the corner, the USA maybe looking at recession risk, that makes no sense because monetary policy all around the world are still more accommodative and the USA economy is growing faster than it long run trend and the Fed policy is still accommodative, the real Fed funds rate is barely above zero", Glassman said in an interview with CNBC-TV18.
"The markets are pricing in downside risks. and they are obviously well ahead of the data, particularly if you look at this morning's labor market data", Powell said.