Stocks, Bonds Rally After Fed’s Meeting Minutes: Markets Wrap

(Bloomberg) — US stocks rose as investors parsed policy minutes from the Federal Reserve’s latest meeting that showed most officials backing slowing the pace of interest-rate hikes soon.

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The S&P 500 pushed higher after the meeting minutes released. The Nasdaq 100 rose more than 1%. Market trading volumes are expected to be lighter, given the US Thanksgiving holiday on Thursday. Treasuries rallied, with the 10-year yield around 3.71%. The dollar extended its drop.

Several Fed officials backed the need to moderate the pace of rate hikes, the central bank’s Nov. 1-2 meeting minutes show. Only a small number of these officials underscored the need for a higher terminal rate. Since the Fed’s latest meeting, investors have parsed a bevy of economic data that somewhat eased inflation concerns, further strengthening the case for smaller rate hikes.

“The minutes were dovish as they recognized a softening in consumer demand and tightening international economic and financial conditions,” said Jay Hatfield of Infrastructure Capital Management.

Read More: Key Takeaways From Minutes of Fed’s November Meeting on Rates

Still, some investors think that the meeting minutes didn’t convey anything new and that markets may be overreacting to the perceived shift in tone.

“The minutes said that hikes can be smaller than 75bps but also that the terminal rate will need to be higher than previously thought — which also is pretty much what everyone at the Fed has been signaling anyway,” said Max Gokhman, chief investment officer at asset manager AlphaTrAI. “It’s almost weird we’re getting any kind of big moves on the minutes. I guess the market is happy to take a longer road to a more painful outcome given the reaction to the minutes.”

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Key events this week:

ECB publishes account of its October policy meeting, Thursday

US stock and bond markets are closed for the Thanksgiving holiday, Thursday

US stock and bond markets close early, Friday

Some of the main moves in markets:

Stocks

The S&P 500 rose 0.7% as of 3:16 p.m. New York time

The…

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