Equity markets tread water on a holiday-shortened trading day at the start of a holiday-shortened week. The S&P 500 traded within a very tight range to close relatively unchanged from the prior week as traders prepare for the holiday and a highly-anticipated NFP read at the end of the week. The NFP is expected to show solid job gains and a decline in inflation that will allow the Fed to continue hiking rates. Additionally, wage gains are expected to continue to underpin inflation and lead to additional interest rate hikes.

The Fed's next move will come later this month. The FOMC is expected to hike rates by 25 basis points and put the core rate at the highest level in over 2 decades, ushering in economic conditions not seen since the 1980s. The consensus is that interest rates will still be higher through the end of the year and put a cap on demand. In this scenario, the recession the market has feared for the last 18 months gets closer to reality.