It’s happening again, and without much fanfare.  Stocks are climbing off the canvass following the lead of crude oil, which resumed its October momentum after briefly being tripped up.  If West Texas Intermediate closes above $50.00, it could be extrapolated as a sign the global economy has dodged a bullet.  The other factor is the disarray in Saudi Arabia, a theory I put forth last week that many thought was foolhardy.

WTI  

The Fed’s Market Watch

The early bounce and momentum got a charge at 2PM with the release of Fed minutes that showed concern for financial markets and also hinted at selling of US treasuries to fight currency wars.

Despite the decline in global equity markets and the downward shift in the expected path of the federal funds rate, yields on nominal Treasury securities moved up modestly, with some market participants citing purported sales of Treasury securities by foreign government authorities to finance foreign exchange market intervention as a factor that likely put upward pressure on Treasury yields. Measures of inflation compensation based on Treasury Inflation-Protected Securities fell to near their historical lows.

Broad U.S. equity price indexes were highly correlated with foreign equity indexes over the intermeeting period and posted net declines. Although concerns about global economic growth likely contributed to the declines in domestic equity prices, investors may also have reassessed valuations and risk in equity markets. Domestic equity indexes were quite volatile in late August and early September, and one-month-ahead option implied volatility on the S&P 500 index reached levels last seen in 2011.

FOMC Minutes

Overall I think the comments were dovish, but don’t completely rule out a hike in December.  It’s hard for me to see the Fed not making a symbolic move to buy time during the 2016 election year.  Of course, economic data best get much better and market turmoil needs to fade away.