The last FOMC minutes signal that the Fed will not stop hiking interest rates until inflation is firmly on the path to 2%. The Fed officials agree that they will need to raise interest rates by 50 bps at their next two meetings. However, after that the Fed will likely be very data dependent.

Investors have been worrying about a coming US recession as earnings from Walmart and Target signal that discretionary consumer spending could be falling, So, if the US economy does take a further turn slower then a September pause in hikes could be ahead.

Would that mean that the S&P500 could start to gain again early in anticipation of a Fed on pause? The S&P500 seasonals tend to strongly favour gains into year end.

Over the last 25 years the S&P500 index has gained 19 times between October 08 and December 31. The largest gain was 28.12% in 1998. Are there more gains to come again this year on expectations of the Fed hitting pause on hikes around September?

Major Trade Risks:
Any significant news that changes the monetary policy outlook for the Fed like surging inflation that requires more rate hikes will change this outlook.

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