HIBL - The S&P 500 Rises On Slowing U.S. Inflation News

• This week's inflation news suggests the Federal Reserve's campaign to slow inflation by slowing the economy is finally having its desired effect.
• Investors fixed their attention more fully on the distant future quarter of 2023-Q1 in setting current day stock prices.
• Investors are now anticipating a half-point rate hike in September 2022 (2022-Q3), down from the three-quarter point rate hike they anticipated last week.

After dipping nearly 23 points from its previous week's close, the S&P 500 (Index: SPX ) jumped 2.1% on Wednesday, 10 August 2022 after the Bureau of Labor Statistics reported inflation slowed in July 2022. The index went on to reach 4,280.15 by the end of trading on Friday, 12 August 2022, nearly 3.3% higher than where it closed a week earlier.

In doing that, investors fixed their attention more fully on the distant future quarter of 2023-Q1 in setting current day stock prices. The latest update to the alternative futures chart shows that development.

This week's inflation news suggests the Federal Reserve's campaign to slow inflation by slowing the economy is finally having its desired effect. Investors are now looking at 2023-Q1 as the quarter in which the Federal Reserve's ongoing series of rate hikes will peak.

That can be seen in how the CME Group's FedWatch Tool projections of the Fed's future interest rate hikes have changed. Investors are now anticipating a half-point rate hike in September 2022 (2022-Q3), down from the three-quarter point rate hike they anticipated last week. The FedWatch tool indicates it will be followed by another half-point rate hike in November (2022-Q4), then a quarter-point rate hike in December (2022-Q4), which may now mark the end with the Fed's target Federal Funds Rate topping out in the 3.50-3.75% range. After that, FedWatch tool anticipates it will hold that level through July 2023, but with a growing likelihood of rate cuts as more time passes and as economic growth slows.

More stuff than that happened during the week that was. Here's our recap of the otherwise quiet news week's market-moving headlines:

Monday, 8 August 2022

• Signs and portents for the U.S. economy:
  • Wait and see: U.S. companies curb investment as they await Fed moves
  • Oil rises nearly 2% on strong economic data but trade choppy
  • U.S. consumers' inflation outlooks drop sharply, NY Fed survey shows
• Bigger trouble developing in Canada, Mexico:
  • Cold and hungry: Food inflation bites Canada's north
  • Mexico's July inflation seen at highest level since 2000: Reuters poll
• Wall Street closes little changed on Fed policy fears

Tuesday, 9 August 2022

• Signs and portents for the U.S. economy:
  • Oil settles lower as halted Russian pipeline flows appear temporary, demand fears rise
  • U.S. productivity drops in second quarter; annual decline largest ever
• BOE minions planning more rate hikes:
  • Exclusive-Bank of England will probably need to raise rates again, Ramsden says
  • Exclusive-Bank of England would sell gilts even if it cuts rates in future, Ramsden says
• Nasdaq closes lower as chipmaker Micron's warning renews tech rout
  • Micron's warning of weak demand rattles chip stocks | Reuters

Wednesday, 10 August 2022

• Signs and portents for the U.S. economy:
  • U.S. consumer price growth unchanged for July
    • Instant View: US CPI unchanged in July, raises hopes of Fed slowing
  • Column - Deep U.S. curve inversion hastens the recession it predicts: McGeever
• Fed minions claim they're hell-bent on rate hikes:
  • Fed may slow rate hikes, but policymakers say more is needed
    • Fed's Kashkari: More rate hikes ahead, and possible recession
    • Fed to raise interest rates to 4% next year, Evans says
• China pledges to stimulate Chinese economy:
  • China central bank says it will step up policy implementation, keep liquidity ample
    • China's factory inflation hits 17-month low, consumer prices speed up
• More central bank minions joining in global rate hikes:
  • Thailand hikes rate for first time since 2018 to tame hot inflation
• Wall Street rally lifts Nasdaq 20% from low as inflation fears ebb
  • Analysis - Softer inflation 'huge relief' for battered investors in U.S. stocks and bonds

Thursday, 11 August 2022

• Signs and portents for the U.S. economy:
  • U.S. producer prices fall in July; weekly jobless claims climb
• Fed minions want MOAR rate hikes!
  • Fed officials say more rate hikes needed, despite slowing inflation
    • Marketmind: Fed doesn't see enough swallows for summer
    • Fed's Mary Daly says it's too early to 'declare victory' over inflation - FT
• Nasdaq, S&P 500 retreat as rate hike fears cool stock rally

Friday, 12 August 2022

• Signs and portents for the U.S. economy:
  • U.S. import prices fall more than expected in July
  • Oil falls 2% on expectations that U.S. Gulf supply disruption will ease
• Fed minions anxious to keep turning the screws on inflation with rate hikes:
  • Fed's Barkin: interest rates need to get 'restrictive'
• Bigger trouble, stimulus developing in China:
  • Hong Kong's Q2 GDP shrinks 1.3% y/y; govt cuts 2022 forecast
  • China new bank loans tumble more than expected amid property jitters
    • China to accelerate disposal of smaller banks' bad loans
    • China poised to partially renew medium-term policy loans, keeping rate steady
• Bigger trouble developing in Eurozone:
  • Winter diesel shock looms as tanks dry up ahead of sanctions
  • French maize crop rating tumbles as drought deepens
• S&P 500, Nasdaq close up 4th straight week as optimism grows
  • U.S. stock market: Is it a bull, a bear, or a bull in a bear?

The Atlanta Fed's GDPNow tool 's forecast for real GDP growth in 2022-Q3 surged to 2.5%, up from last week's projection of 1.4%.

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