Stocks jumped and bond yields slid after the minutes from the last Federal Reserve policy meeting were less hawkish than investors feared and reaffirmed the slowing of rate hikes.

“It’s largely as expected. I think the Fed is saying they’re going to slow the pace. It’s about the terminal rate, and I generally don’t think they know exactly where the terminal rate is going to lie,” said Greg Faranello of AmeriVet Securities. “They’ll notch up another 50 [basis points] in December and we’ll see how the data goes in 2023.”

A basis point equals 0.01 of a percentage point. The market expects a terminal rate, or end point for Fed rate hikes, at about 5%.

The minutes showed that a majority of Fed officials believe a slowing in the pace of rate hikes would soon be appropriate. The market has been anticipating a 50 basis point hike in December, following four hikes of 75 basis points each.

The minutes also noted that a slower pace would allow the Fed to assess whether it is making progress toward its goals of maximum employment and price stability.

“Not particularly surprising, but with several officials seeing increased risks from rapid rate hikes, the Committee is clearly acknowledging that the hiking campaign is not going to be without consequence for the real economy,” wrote Ian Lyngen, head of rates strategy at BMO.

–Patti Domm