Equities around the globe rallied on Friday while bond yields rose after sharply declining earlier in the week as U.S. employment data pointed to economic strength and Federal Reserve chair Jerome Powell said the United States central bank would be patient with monetary policy.
The U.S. central bank hiked interest rates four times last year, including in December when policymakers' forecasts pointed to two more rises this year.
"As always, there is no preset path for policy", Powell said, according to CNBC. That announcement rallied the Dow Jones Industrial Average up 746 points before the closing bell. The Fed chairman, responding to a question about what he would do if Trump asked him to step down, said he would not resign.
Earlier on Friday, the Labor Department reported that nonfarm payrolls jumped by 312,000 jobs, well above market expectations, while wages and labour force participation rose, all signals of sustained economic strength.
"No one knows whether this year will be like 2016", Powell said in remarks that appeared to be scripted at the start of the event. "Can we wait?", Cleveland Federal Reserve Bank President Loretta Mester said in an interview with Reuters.
Jerome Powell, chairman of the Fed said: "Markets are expressing concerns about global growth in particular, that's becoming the main focus and trade negotiations which are related to that".
For Trump, Powell's decision to raise interest rates didn't make sense, said sources familiar with Trump and the situation.
On December 19, the Federal Reserve increased the interest rate for the fourth time in 2018 - from 2.25 percent to 2.5 percent.
While it's not a real-economy measure, the Fed closely watches market volatility because it can feed through to consumer and business sentiment and the real economy.
Powell on Friday stressed that the Fed was prepared to adjust the pace at which it trimmed the balance sheet if necessary to support economic growth. But it has been gradually reversing that stance over the past year, although the balance sheet still remains above $4 trillion.
While Trump has sent out a number of tweets criticizing Powell and calling the Fed his biggest threat, Powell said that he had not received any direct pressure from the White House. Asked if he had had any face-to-face meetings with Trump, Powell said he had not although he said previous Fed leaders have had discussions from time to time with previous presidents.
Trump has been vocal about his dissatisfaction with Powell, noting on Christmas Eve on Twitter, "The only problem our economy has is the Fed..."