Unexpectedly Intriguing!
23 January 2023

The S&P 500 (Index: SPX) ended the week down 26.48 points from the previous Friday, closing at 3,972.61.

In between the two Fridays, the index dipped and recovered, but otherwise experienced an uneventful week.

Alternative Futures - S&P 500 - 2023Q1 - Standard Model (m=+2.0 from 13 September 2022) - Snapshot on 20 Jan 2023

We find the level of the S&P 500 is consistent with investors holding their focus on 2023-Q1, which itself is consistent with the expecting timing of the peak of the Federal Reserve's ongoing series of rate hikes. Meanwhile, here are the week's not-so market moving headlines, which reinforce why investors are holding their focus on the current quarter of 2023-Q1:

Tuesday, 17 January 2023
Wednesday, 18 January 2023
Thursday, 19 January 2023
Friday, 20 January 2023

The CME Group's FedWatch Tool continues to project quarter point rate hikes at both the Fed's upcoming 1 February and 22 March (2023-Q1) meetings, with the latter representing the last for the Fed's series of rate hikes that started in March 2022. The FedWatch tool then anticipates the Fed will hold the Federal Funds Rate at a target range of 4.75-5.00% through September 2023. After which, developing expectations for a U.S. recession in 2023 have the FedWatch tool projecting quarter point rate cuts in both November and December (2023-Q4).

The Atlanta Fed's GDPNow tool's latest projection for real GDP growth in the fourth quarter of 2022 dropped +3.5% from last week's +4.1% estimate. Meanwhile, the so-called "Blue Chip" consensus forecast anticipates a +1.7% growth rate. The BEA will issue its first estimate of 2022-Q4's GDP later this month, on Thursday, 26 January 2023.

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