US stocks continue rally on ugly PMI figures and dovish FOMC minutes

US indices finished another session up after a wild ride as the “bad news is good news” narrative saw a steep rally after disappointing services and manufacturing PMI’s were released, then sold off into the European close only to rally steeply again as what was considered dovish FOMC minutes were released late in the session. All major indices finished in the green, with the Nasdaq outperforming, finishing up almost 1%.

The FOMC minutes from November’s meeting were released late in the US session and were taken as mostly dovish. The minutes noted that a substantial majority of Fed members judged “a slowing in the pace of interest rate hikes would likely soon be appropriate”. This appeared to confirm the higher for longer ‘pause’ idea that was considered in the actual FOMC statement, before Chair Powell’s presser spooked the markets earlier in the month. Rates markets were quick to re-price expectations with Fed rate trajectory expectations shifting dovishly and the terminal rate falling and seeing the US dollar tumble to 1-week lows.

Cryptos also gained on improved risk sentiment, Bitcoin has rallied back above $16,500, erasing the losses from the FTX Hacker dumps, Ethereum not far behind.

Crude Oil prices were the odd ones out as they fell after continued confusion over Russian oil price caps and US Department Of Energy reports of large product inventory builds. USOUSD tumbled over 4% back to the $77 handle, capping off a roller-coaster of a ride for oil traders this week.

With the US effectively finished for the week due to the Thanksgiving holiday the economic calendar is empty of any major event risks and low volume and volatility looks likely until Monday.