After investors were washed in volatility the past few months, it was time for stocks to rally after a positive jobs report and a more accommodative central bank boosted equities. In the meantime, Treasury yields rose, putting downward pressure on government bond prices on Friday.
The Direxion Daily S&P500 Bull 3X ETF (NYSEArca: SPXL) rose 10 percent on the strength of the Dow Jones Industrial Average gaining over 700 points, while the Direxion Daily 20+ Yr Trsy Bull 3X ETF (NYSEArca: TMF) fell 3 percent. A flight to the safe-haven confines of Treasury debt has been a persistent trend the last few months, but the positive jobs growth data and Powell’s comments provided the boost for stocks.
The Federal Reserve didn’t show much dynamism in 2018 with respect to monetary policy, obstinately sticking with a rate-hiking measure with four increases in the federal funds rate. That appears to have changed given the current economic landscape, and especially in the capital markets as Fed Chair Jerome Powell is now preaching patience and adaptability.
“As always, there is no preset path for policy,” Powell said. “And particularly with muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves.”