The summer doldrums may finally have arrived for the S&P 500 (Index: SPX). The index dipped a little over 1.1% in value from its previous week's close to end the Fourth of July holiday-shortened trading week at 4398.95.

What little market-moving news there was arrived in the latter half of the week. Once again, it was linked to economic data that helped cement expectations the Federal Reserve will resume hiking the Federal Funds Rate by another quarter point when it meets later this month.

As we enter the third calendar quarter of 2023, we've rolled the dividend futures-based model's alternative futures chart forward to reveal what lies ahead. It shows we're coming up on the end of the redzone forecast period we first sketched on 17 April 2023 during the next two weeks. As it ends, we find investors are mainly focused on the now current quarter of 2023-Q3.

The end of the redzone forecast period will coincide with the timing of the Federal Reserve's Open Market Committee meeting, which will provide an opportunity to check the calibration of the model's multiplier. Coming into 2023-Q3, the data suggests the multiplier is still approximately 1.5, the same as it has been since 9 March 2023.

Here are the market-moving headlines from the trading week ending on 7 July 2023.

Monday, 3 July 2023

• Signs and portents for the U.S. economy:
  • US 2yr/10yr yield curve hits deepest inversion in 42 years
  • Oil settles lower as economic jitters outweigh supply cuts
  • US manufacturing slump deepens, factory gate price pressures subdued
• Bigger trouble developing in China:
  • China's June factory activity slows as conditions weaken - Caixin PMI
• Signs of bigger trouble developing in Asia:
  • Japan factory activity slips back into contraction in June on soft orders
  • South Korea factory activity suffers longest downturn in at least 19 years
• Bigger trouble developing in the Eurozone as ECB minion's rate hikes take toll:
  • Euro zone factory downturn deepened in June as ECB hikes bite-PMI
    • Factbox-European companies cut jobs as economy sputters
    • German manufacturing shrinks in June as demand weakens-PMI
    • Italy's manufacturing shrinks at steepest rate since COVID lockdowns - PMI
    • Spanish factory output contracts in June for the fourth consecutive month - PMI
• Wall St ends slightly higher in shortened session, Tesla jumps

Wednesday, 5 July 2023

• Signs and portents for the U.S. economy:
  • Oil prices rise 2% as market weighs supply cuts against economic outlook
  • Why a $1.5 trillion source of corporate financing is choking on higher rates
  • U.S. factory orders miss expectations in May
• Fed minions claim pausing rate hikes was appropriate, but say they will resume:
  • Fed’s Williams: June rate pause was right move, but future hikes still in play
  • 'Almost all' Fed officials agreed to skip June hike -minutes
• Bigger trouble developing in China:
  • China's choice of PBOC party chief signals financial stability worries
    • China state lenders lower dollar deposit rates for second time in a month - sources
• ECB minions getting results from rate hikes they wanted:
  • Euro zone business activity contracts in June -PMI
• Wall Street posts modest loss after Fed minutes

Thursday, 6 July 2023

• Signs and portents for the U.S. economy:
  • Oil near flat as tighter supplies offset U.S. rate hike risk
  • US labor market shows resilience on eve of June's employment report
    • US layoffs halve in June as tech job cuts ease - report
  • U.S. mortgage rates rise to 6.81%, highest level this year -Freddie Mac
    • Small U.S. homebuilders tap the brakes as credit squeeze, rising rates hurt
• Fed minions getting excited to restart rate hikes:
  • Fed's Logan says more rate hikes needed amid unexpected economic strength
    • US rate futures lift chances of November hike after overall upbeat data
    • Explainer: Charting the Fed's policy path
• Bigger stimulus claimed to be developing in China:
  • China will take measures to support growth, says state media
• ECB minions getting results they wanted from rate hikes, back new rules for shutting down failing small banks:
  • Euro zone retail sales flat in May, still down year-on-year
  • ECB backs draft EU rules for winding down smaller banks
• Wall St logs sharp losses as labor market strength stokes rate-hike fears
  • US bank stocks fall as investors turn jittery ahead of Q2 results

Friday, 7 July 2023

• Signs and portents for the U.S. economy:
  • Oil prices up 3% to 9-week high on supply concerns
  • US job growth slows; wage gains remain strong
    • Instant View: June US jobs growth cooled, but wages won't comfort Fed
• Expectations Fed minions will soon hike rates firm after jobs report, Fed minions believe they're on "golden path" for more rate hikes:
  • Fed interest-rate hike seen a lock for July
    • Explainer-Charting the Fed's policy path
  • Fed's Goolsbee: 'golden path' includes a couple of rate hikes
• Bigger trouble developing in China:
  • Taiwan June exports slump the most in 14 years on weak China, US demand
• BOJ minions to keep never-ending stimulus alive longer:
  • BOJ deputy governor Uchida vows to keep yield control for now - Nikkei
    • BOJ likely to forgo YCC tweak in July despite broadening inflation - ex-central bank official
  • Japan's base salaries jump most since 1995, puts BOJ policy into view
• S&P 500 ends first week of July with ~1.2% loss after posting huge gain in H1

The CME Group's FedWatch Tool still projects the Federal Reserve will hike the Federal Funds Rate by just a quarter point to a target range of 5.25-5.50% when it meets on 26 July (2023-Q3). After that, the FedWatch Tool gives better than 50% odds the Fed's series of rate hikes that began in March 2022 will be done, with no changes until early 2024, though November 2023 may become a point of interest for a potential additional rate hike on the time horizon. The FedWatch Tool indicates investors expect the Fed will initiate a series of quarter point rate cuts at six-to-twelve-week intervals starting in May 2024.

The Atlanta Fed's GDPNow tool estimate of the real GDP growth rate for current quarter of 2023-Q2 ticked down to +2.1% from the forecast +2.2% growth rate recorded a week earlier.

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