Closing Recap 

U.S. stocks rallied for a fourth consecutive session on Wednesday, capping a powerful “V-shaped” recovery from last week’s lows as dovish economic data solidified bets on a December rate cut. All major indices finished higher, with the Dow climbing over 300 points and the small-cap Russell 2000 continuing its strong outperformance. The U.S. dollar and Treasury yields both fell as the probability of a Fed rate cut surged to 87%. This dovish repricing fueled a rally in rate-sensitive assets, with gold soaring to settle above $4,200 an ounce. Crude oil found a bid, and even the battered crypto market saw a late-day spike, with Bitcoin jumping back above $90,000. Markets are now heading into the Thanksgiving holiday with a decidedly bullish tone. 

Key Takeaways 

• Stocks Rally for 4th Straight Day: The S&P 500 has now erased all of last week’s losses in a powerful four-day rally, with the Dow hitting a two-week peak. 
• Dovish Data Cements December Rate Cut Bets: Weaker-than-expected Jobless Claims and a soft Chicago PMI reading sent the probability of a December Fed rate cut soaring to 87%. 
• Small Caps Continue to Outperform: The Russell 2000 has surged roughly 7% over the past four days, a strong sign of improving market breadth and risk appetite. 
• Dovish Fed Bets Drive the Narrative: Market-implied odds for a 25bps Fed rate cut in December have soared to over 87% following weak U.S. data, a sharp reversal from just a week ago and the primary driver of the current “risk-on” mood.
• Gold Surges Past $4,200: The precious metal gained another 0.6% to close at a new high for the move, benefiting from falling yields and a weaker U.S. dollar. 
• Pound Rallies on Fiscal Tightening Hopes: The British Pound is a notable outperformer, rallying to a one-week high as traders cheer a fiscally tighter UK Autumn Budget, which included significant tax increases.
• Traders on High Alert for BoJ “Thanksgiving Trap”: With U.S. liquidity set to dry up for the Thanksgiving holiday, traders are on high alert for a potential surprise intervention from the Bank of Japan to strengthen the yen in thin market conditions. 
• Aussie and Kiwi Dollars Soar on Hawkish Central Bank Surprises: The Australian and New Zealand dollars are standout performers. The Aussie surged after hot inflation data killed rate cut bets, while the Kiwi jumped after the RBNZ cut rates but signaled an end to its easing cycle.
• Bitcoin Spikes Back Above $90k: After a brutal month, Bitcoin saw a late-day surge of over 3%, providing a glimmer of hope for the beleaguered crypto market. 
• Bullish Calls from Wall Street Grow Louder: JPMorgan is now forecasting the S&P 500 could reach 8,000 by 2026, adding to a growing chorus of bullish year-end outlooks. 

Market Overview

What a difference a few days make. The market’s tug-of-war has been decisively won by the bulls. The fear and technical breakdowns of last week feel like a distant memory as a powerful wave of buying has swept through the market. The catalyst for this dramatic 180-degree turn in sentiment has been a clear dovish pivot from Federal Reserve officials, which was subsequently validated by a string of softer economic data. The latest evidence came on Wednesday, with weekly jobless claims remaining contained and September’s durable goods orders showing a slowdown, reinforcing the narrative of a cooling economy that gives the Fed ample room to cut interest rates. 

Index	Up/Down	%	Last
DJ Industrials	314.67	0.0067	47427
S&P 500	46.73	0.0069	6812
Nasdaq	189.1	0.0082	23214
Russell 2000	20.14	0.0082	2486

This “bad news is good news” dynamic has been the primary driver of the rally, sending the odds of a December rate cut rocketing from below 40% last week to 87% today. The market’s reaction has been classic risk-on: bond yields and the dollar have fallen, while equities, particularly rate-sensitive small caps and gold, have soared. With bullish forecasts from major banks like JPMorgan now calling for significant further upside, and with the market entering a historically strong seasonal period, the path of least resistance appears to be higher into year-end. However, traders will need to navigate the thin liquidity of the Thanksgiving holiday, which brings the added risk of a potential “Thanksgiving Trap” intervention from the Bank of Japan.

Economic Calendar 

With U.S. markets closed for Thanksgiving, today’s session will be extremely quiet. The focus will be on European data and any headlines that emerge during the thin holiday trading. Data Released Yesterday / Overnight: 

• U.S. Weekly Jobless Claims: Came in better than expected at 216K, climbed to a new cycle high of 1.960M, indicating layoffs remain contained. 
• U.S. Durable Goods Orders (Sep): Grew a solid +0.5% m/m, though this was a slowdown from August’s pace. 
• Federal Reserve Beige Book: Noted that employment declined slightly and highlighted that some firms were using AI to replace entry-level positions. 
• New Zealand Business Confidence (Nov): Surged to an 11-year high, while Q3 retail sales also showed a huge jump, prompting the RBNZ to signal an end to its easing cycle. 

Today’s Economic Calendar: 

• U.S. Markets Closed for Thanksgiving Holiday. 
• European Session: German GfK Consumer Sentiment and ECB Meeting Minutes are the main releases, though neither is expected to be a major market mover. 

Asset Class Spotlight: FX, Commodities, Bonds & Crypto

Gold prices continued their impressive rally, with December futures settling up another 0.6% at $4,202.30 an ounce. The metal is now up nearly 3% this week, driven by soaring expectations for a Fed rate cut. Deutsche Bank has lifted its 2026 forecast to $4,450. Crude oil also found a bid, with WTI rallying 1.2% to settle at $58.65 a barrel, supported by the broad improvement in risk sentiment and a larger-than-expected build in U.S. inventories. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	0.7	0.0121	58.65
Gold	25	0.006	4202.3
EUR/USD	0.0022	0.0019	1.1591
USD/JPY	0.37	0.0024	156.41
Bitcoin	3,000+	3.4%+	90,000+
10-Year Note Yield	-0.01	-0.0025	0.03992

The U.S. dollar is on the back foot as dovish Fed bets weigh on the greenback. The main focus for FX traders is the elevated risk of a surprise intervention from the Bank of Japan during the thin liquidity of the U.S. Thanksgiving holiday. 

• EUR/USD: The pair is extending its uptrend for a fourth straight day, climbing above the 1.1600 level. The single currency is benefiting from the broad-based weakness in the U.S. dollar and a stable ECB outlook. 
• GBP/USD: The Pound is the main beneficiary of the dollar’s weakness, surging to a one-week high near 1.3260 after the UK Autumn Budget revealed significant tax increases, a move seen as a step towards fiscal responsibility that could strengthen long-term confidence in UK assets. 
• USD/JPY: The yen has recovered from its recent lows as intervention fears mount. Traders are speculating that the Thanksgiving holiday provides the perfect “window” for Japanese authorities to intervene and support the yen, effectively capping the pair’s recent decline. The Yen is finding support from intervention fears, especially with the looming “Thanksgiving Trap”—a scenario where Japanese authorities could use the low-liquidity U.S. holiday to trigger a sharp, outsized move to strengthen the Yen.

Cryptocurrencies: After a month of brutal selling, the crypto market saw a significant late-day spike on Wednesday. Bitcoin jumped 3.4% to reclaim the $90,000 level, providing a glimmer of hope for the battered sector as the rebound in broader risk appetite finally spilled over into digital assets. 

U.S. Treasury yields were slightly lower as investors continued to price in a more dovish Fed. The benchmark 10-year yield ended the day around 4.0% as the bond market, which is now on pace for its best year since 2019, heads into the holiday break. 

Looking Ahead 

With U.S. markets closed for Thanksgiving, today’s session will be extremely quiet, with very thin liquidity. The main risk for traders will be any surprise headlines or a potential intervention from the Bank of Japan. The market will reopen for a half-day session on Friday, but many traders will likely remain on the sidelines until next week, when month-end flows could also impact price action.

What to Watch

• The “Thanksgiving Trap” in USD/JPY: This is the most significant, actionable risk for FX traders. With Japanese authorities threatening intervention and liquidity set to be extremely thin, the risk of a sudden, sharp spike lower in USD/JPY from tonight through Friday is significantly elevated. 
• The Dovish Repricing: The market has aggressively repriced a December Fed cut back to an 87% probability. This is now the primary driver of market sentiment. The market will be looking for confirmation of this view when the backlogged U.S. data is finally released. 
• The Rotation Reversal: The powerful rebound in growth and small-cap stocks this week marks a sharp reversal of the defensive rotation seen previously. The key test will be whether this “risk-on” leadership can be sustained. 
• Bank Forecasts Diverge on Oil: The long-term outlook for oil is a source of major debate. JPMorgan is calling for prices to plunge into the $30s by 2027, while Goldman Sachs sees a drop to the low $50s in 2026 before a rebound. This divergence highlights the deep uncertainty in the energy market.