With another higher-than-expected inflation print during the week, the S&P 500 (Index: SPX) experienced another surge of volatility during the week that was.

But by the end of the week's trading, the index closed at 3,592.76, down 46.90 points or 1.3% from the previous week's close. It also ended the week right in the middle of the most recent redzone forecast range we added to the alternative futures chart several weeks ago, as stock prices resumed their downtrend.

The week's most volatile action is concentrated from Thursday to Friday, 13-14 October 2022. The pricipitating factor for the volatility was the higher-than-expected rate of inflation in the U.S. reported on 13 October 2022. That news initially sent stock prices until the prospect of a full percentage point increase by the Fed at its next meeting prompted a surge in stock prices as investors shifted a portion of their forward looking focus toward the nearer term.

But only a partial shift, where once again, the change in stock prices didn't change enough to qualify as a full Lévy flight. By the end of the week, we find the S&P 500's trajectory to be consistent with the projected trajectory associated with investors focusing their attention fully on 2023-Q2.

We'll discuss the reason why that is at the end, following our recap of the week's market moving headlines.

Monday, 10 October 2022

• Signs and portents for the U.S. economy:
  • Oil falls by nearly 2% as recession fears outweigh tight supply prospects
    • OPEC cut spurs U.S. hedging - but against lower oil prices
• Fed minions on board with keeping bigger rate hikes going:
  • Fed's Brainard says rates to stay restrictive, but attentive to risks
  • Evans: close alignment on rate hikes, still chance for soft landing
• Bigger trouble developing in China:
  • China's services activity falls for first time since May
  • China's holiday home sales fall 37.7% y/y - private survey
• IMF and World Bank minions getting excited about developing global recession:
  • World Bank's Malpass, IMF's Georgieva see rising risks of global recession
• Eurozone national central banks sign onto rate hikes, lower economic growth to combat inflation:
  • Inflation could mean more rate hikes than expected, Dutch central bank says
  • French central bank trims economic growth estimate
  • Czech cenbank chief: higher budget gaps would hamper inflation fight
• ECB minions worried they aren't doing enough and aren't doing too much to hit inflation target several years from now:
  • ECB's Knot says inflation warnings not yet priced in
  • ECB's Centeno warns of possible policy overreactions
  • ECB engaged in bringing down inflation to 2% in two to three years from now - Villeroy
• Nasdaq registers lowest close since July 2020; chips stocks fall
  • U.S. aims to hobble China's chip industry with sweeping new export rules

Tuesday, 11 October 2022

• Signs and portents for the U.S. economy:
  • U.S. Treasury's Yellen: Markets are functioning well
  • U.S. banks likely set aside $5 billion in Q3 reserves as recession risks grow
  • Oil settles lower on China COVID flare-up, recession fear
• Fed minions can't believe their hiking interest rates hasn't slowed inflation they let get out of control:
  • Fed's Mester says central bank has yet to make a dent in inflation
• Bigger trouble, stimulus rolling out in China:
  • China Gives Clearest Sign Yet It Will Stick With Zero-COVID Strategy
  • China new bank lending nearly doubles after central bank help
  • China central bank says will 'resolutely' curb big currency swings
• Bigger trouble developing in the U.K:
  • Bank Of England To Global Markets: 'You Have 3 Days To Sell All The Things'
  • British pension funds step up fire sales as need for cash soars
  • BoE quantitative tightening likely to be delayed until later this year -fund manager
  • Factbox-What are index-linked bonds and why is the Bank of England is buying them?
• IMF minions say high inflation to run another two years, debt-ridden nations can expect to feel pain:
  • IMF chief economist says central banks' inflation fight to last into 2024
  • IMF's Gopinath: Poorer nations do face big debt challenges
  • IMF cuts 2023 growth outlook amid colliding global shocks
  • IMF warns inflation fight, geopolitical events driving up financial stability risks
  • Factbox-Ticking bomb: The risks the IMF sees to financial stability
• ECB minions looking to unload their expansive holdings of Eurozone government debt:
  • ECB's Villeroy lays out plan for shrinking balance sheet
• S&P 500, Nasdaq end lower; BoE comments add to market jitters late

Wednesday, 12 October 2022

• Signs and portents for the U.S. economy:
  • U.S. needs to do more to tackle inflation, deputy Treasury chief says
    • U.S. faces 'larger-than-usual' risks in inflation battle, OECD says
    • Services, food boost U.S. producer prices; some relief could be on the way
    • Aluminium spikes 7% after report of U.S. ban of Russian supplies
    • U.S. mortgage interest rates rise to highest level since 2006
  • Oil down on strong dollar, recession worries and hawkish Fed talk
    • OPEC cuts 2022, 2023 oil demand growth view as economy slows
• Fed minions excited to deliver more, bigger rate hikes and to start losing money:
  • Sept FOMC showed agreement on higher rates for longer
  • Fed's net income turned negative in September, but it was no surprise
• Bigger trouble developing in Japan:
  • Japan's machinery orders post biggest fall in 6 months in blow to corp spending
  • Japan manufacturers' mood sours, higher costs dim outlook - Reuters Tankan
  • Japan keeps up verbal warnings against yen sell-off to halt slide
  • BOJ's Kuroda warns against fast, one-sided yen falls
• BOE minions, new U.K. government do damage control:
  • BoE signals to lenders it is prepared to extend bond purchases - FT
  • UK government: no spending cuts, no reverse on tax cuts
• ECB minions thinking they like more, bigger rate hikes:
  • ECB's Lagarde sticks to rate hikes as bond debate starts
• Wall St ends volatile day lower after Fed minutes, PPI

Thursday, 13 October 2022

• Signs and portents for the U.S. economy:
  • Oil prices rise 2% on low diesel stocks ahead of winter
    • U.S. crude stockpiles surge on reserve releases; distillates draw down - EIA
    • OPEC+ oil supply cuts could tip world into recession, IEA says
  • Biden says prices 'too high' as inflation rises before midterms
    • U.S. Treasury's Yellen says CPI data shows more work needed to control inflation
    • Soaring rent, food costs keep U.S. inflation on front burner; labor market tight
  • Supply chain snarls loosen for U.S. companies, but plenty of problems remain
• Fed minions expected to continue more, bigger rate hikes; say all's okay for financial stability:
  • Fed seen ramping up interest-rate hikes as inflation burns hot
  • Analysis-As markets fret, Fed officials reject idea of rising financial stability risks
• Japanese government minions see more inflation, crank out more stimulus:
  • Japan wholesale prices rise the most in 5 months, put squeeze on corp profits
  • Japan coalition party seeks $13.6 billion for child care in stimulus draft
• ECB minions ready to shed its excess Eurozone government debt holdings, getting excited for more rate hikes:
  • ECB may start balance sheet rundown in second quarter, sources say
  • ECB's hawks call for more rate hikes soon
    • Fiscal expansion risks forcing ECB into more rate hikes, Kazaks says
• Wall Street ends up 2% after sharp reversal; technicals help
  • Wall Street rebounds with a vengeance after initial inflation sell-off
    • Exclusive-ECB staff sees lower rate peak than market, sources say
  • Traders get no reprieve from volatility as CPI sends U.S. stocks on wild ride

Friday, 14 October 2022

• Signs and portents for the U.S. economy:
  • Oil prices fall more than 3% on recession worries
  • U.S. retail sales flat in September; import prices fall again
• Influential Fed minion okay with rapid ramp up to peak Federal Funds Rate, another Fed minion caught with their hand in the insider trading cookie jar:
  • Exclusive-Bullard: September inflation warrants "frontloading," but may not need higher overall rates
  • Bostic acknowledges accidental trades that violated Fed ethics code
• China economy rebounded in 2022-Q3, but bigger trouble developing from zero-COVID policies and more stimulus on tap:
  • China Q3 growth seen bouncing 3.4%, but 2022 set for worst performance in decades: Reuters Poll
  • China's zero-COVID policies save lives - but not livelihoods
  • China central bank to step up policy measures to boost economy ahead of party congress
• Liquidity problems prompting central bankers to coordinate actions more:
  • Global markets like 'whack-a-mole', volatility, liquidity are issues - bank execs
    • Yellen says policymakers improving coordination on global economic challenges
• Despite inflation, BOJ minions determined to keep never-ending stimulus alive while JapanGov minions claim they've got the yen covered:
  • Japan Sept consumer inflation seen at 8-year high, above BOJ's target for 6th month: Reuters Poll
  • BOJ's Kuroda brushes aside chance of interest rate hike
  • Japan would decide appropriately on any excess yen moves -ruling coalition party official
• ECB minions embrace Eurozone recession to fight inflation:
  • ECB policymakers argue for 'restrictive' policy despite recession risk
  • ECB may need 75 bps rates hikes in Oct, Dec before balance sheet cut, Vasle says
  • ECB's De Guindos: will do whatever it takes to bring inflation down
• Wall St drops as consumer data stokes inflation worry
  • Wall Street banks' profits slide as economic clouds loom, some beat forecasts
  • As U.S. markets churn, some stick with rare 2022 winner: energy shares

The CME Group's FedWatch Tool continues to project a three-quarter point rate hike when the FOMC next meets on 2 November 2022, but now signals it will be followed by another on 14 December (2022-Q4). In 2023, the FedWatch tool now projects quarter point rate hikes in February and March (2023-Q1), setting the top for the Federal Funds Rate's target range at 5.00-5.25%. However, that could reverse as earlier as May (2023-Q2) as developing recessionary conditions force the Fed to change its rate hike tactics.

The Atlanta Fed's GDPNow tool's projection for real GDP growth in the just-ended calendar quarter of 2022-Q3 dipped slightly from +2.9% to +2.3% as the U.S. economy rebounded from the week first half of 2022, as supported by recent trade and atmospheric CO₂ data. The Bureau of Economic Analysis will provide its first official estimate of real GDP growth in 2022-Q3 on 27 October 2022.

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