The dollar rose and gold was pounded, falling 2.3 percent. The Dow fell 66 to 15,900 and the S&P 500 was off 6 at 1,781.
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"I would say on the margin, it brings forward tapering expectations by the market, although we still think December has a relatively low probability of seeing a taper," said Ian Lyngen, senior Treasury strategist at CRT Capital. "They'll have the December employment report but they'll still be in the midst of budget negotiations and a possible debt ceiling debacle in January."
The flow of economic data now becomes even more important, as the markets try to handicap the Fed's next move and whether it sees strong enough employment growth in the Dec. 6 jobs report.
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"I think we're probably going to hang more on some Fed comments going forward, and I think the November jobs report takes on a little more importance as we try to get some clarity," DeMarco said.
There is a heavy dose of economic reports Thursday, including PPI and jobless claims at 8:30 a.m. ET. The Markit manufacturing PMI is released at 8:58 a.m. and leading indicators are at 10 a.m. The Philadelphia Fed survey is also released at 10 a.m.
"Today they got October retail sales and that was a pleasant surprise despite the fact it was during the government shutdown," said Zane Brown, fixed income strategist at Lord Abbett. Retail sales rose 0.4 percent, and showed improvements in automobile purchases but also other areas, like restaurants, furniture and sporting goods.
"It just shows the Fed was accurate in its interpretation there wasn't much impact form the government shutdown, and if it was, it was transitory," he said.
Brown said the Fed is still looking for sufficient evidence to move in December or January, and data like retails sales support the idea that the economy is making progress. "I really didn't think they were going to to do anything until March, but looking at these minutes and the economic data since they last met gives them the ammunition," he said.
Brown also said rates will now be under more pressure. "This is the beginning of a longer-term process that's going to translate to higher yields," he said. "We could get to 3 percent 10 years by March ... people are going to wait to see how aggressive they are."
DeMarco sees a higher range currently. "We're in a 2.60 to 3 percent range on the 10 year through the fourth quarter," he said.
Fed speakers Thursday will now get even more attention, including Fed Gov. Jerome Powell who speaks on over-the-counter derivatives at 9:45 a.m., and St. Louis Fed President James Bullard, who speaks on policy and the economy at 12:50 p.m.