Equities closed the week higher but on shaky footing following a pivot from the FOMC. Fed Chief Jerome Powell indicated the committee could slow the pace of interest rate hikes as soon as the next meeting which was what the market wanted to hear. The bad news is that inflation, labor and wage data does not support the idea that inflation is under control or that the Fed can ease off on its policy. While the committee may slow to a 50 basis point pace it should also be expected to continue hiking at that pace until inflation is indeed at 2.0%.

This week could be dicey for traders due to a lack of data on both economics and earnings. There are few notable reports due out but they are interesting on an individual basis only and unlikely to alter the big picture in any way. The takeaway is that conditions are still changing an not for the better. While labor markets remain strong and underpinned by rising wages the impact on consumer spending is getting worse at the same time. The risk is that, at some point, the scale will tip and consumer spending will contract in a meaningful way and bring the economy down with it.