S&P 500 Investors Still Wondering If Rate Cuts Will Be on Fed's Menu

The S&P 500 (Index: SPX) ended the trading week at 6,259.75, down 0.31% from the previous week’s close. Coincidentally, it was also down 0.33% from the new record high of 6,280.46 per share it recorded on Thursday, 10 July 2025.

Another week has come and gone in 2025 and once again, U.S. stock investors are stuck trying to guess whether or not the Federal Reserve will put interest rate cuts on the menu, and if they do, when they will do it.

If you scroll down to our summary of the week’s market moving headlines, you’ll find lots of coy game-playing by Fed officials, some who drop hints of rate cuts to come or others who suggest they just can’t read the economy well enough without lots more data that might make a decision for them.

As for what investor expectations are, the CME Group’s FedWatch Tool was mostly unchanged from the preceding week. It continues to project the Fed will hold the Federal Funds Rate in a target range of 4.25-4.50% until its 17 September (2025-Q3) meeting, when it is expected to cut the rate by a quarter percent. Beyond that date, the FedWatch tool anticipates additional quarter point rate cuts on 10 December (2025-Q4), 18 March (2026-Q1), and 17 June (2026-Q2).

That last date is a new development and is interesting because the latest update of the alternative futures chart shows the index’ trajectory is consistent with investors focusing their forwarding looking attention on the distant future quarter of 2026-Q2.

In recent editions of the S&P 500 chaos series, we have been running with the interpretation that investors were setting 2025-Q2 as their investment time horizon and the index was simply running to the underside of the middle of the alternative future chart’s projection for that quarter. But the longer it tracks with the projection associated with 2026-Q2 combined with the addition of a potentially compelling reason for why that distant future quarter might hold the attention of investors is leading us to think investors may indeed have shifted their attention to it. At the very least, we cannot rule it out at this point of time.

We’ll find out more with the random onset of new information from the newstreams. Much like the ones that drove the market’s movements during the week that was….

Monday, 7 July 2025

• Signs and portents for the U.S. economy:

• US to make several trade announcements in next 48 hours, Treasury secretary says

• Trump threatens extra 10% tariffs on BRICS as leaders meet in Brazil

Oil steadies as tight market supports despite big OPEC+ hike

OPEC+ speeds up oil output hikes, adds 548,000 bpd in August

Bigger trouble, stimulus developing in China:

• Calls grow for China’s household sector to be bigger economic driver
• Exclusive: China’s central bank asks financial institutions about dollar weakness, sources say
• China’s rare earth export controls are good for Beijing, bad for business

• How China tightened its grip over its rare earth sector

BOJ minions see impact of inflation in Japan’s economy:

• Japan’s May real wages fall the most in nearly two years

Better than expected economic news in Eurozone:

• German industrial output rose more than expected in May

U.S. stocks end in the red as new Trump tariffs weaken the markets

• S&P Dow Jones Indices reports slowdown in U.S. dividend growth for Q2 amid tariff, cost concerns

Tuesday, 8 July 2025

• Signs and portents for the U.S. economy:

• Oil steady on strong gasoline demand, Red Sea attacks while Trump tariffs loom
• US to produce less oil in 2025 than previously expected amid declining prices, EIA says

Chief Fed minion drawing political fire for not acting to cut U.S. interest rates:

• Trump says Fed’s Powell should resign immediately

Bigger stimulus developing in China:

• China economy to top $19.5 trillion this year, says state planner
• China’s factory-gate deflation worst in two years as trade war bites

• China Reports Worst Producer Deflation In 2 Years Amid Ongoing Trade Uncertainty

BOJ minions worry about impact of inflation of rice prices in Japan:

• BOJ’s Koeda says she’s keeping an eye on second-round effects from rice prices -Bloomberg

• Will Japan’s Rice Price Shock Lead To Government Collapse And Spark A Global Bond Crisis

U.S. stocks extend losses after Trump targets copper, says no tariff deadline extension

• Wall St stocks edge lower as investors look for tariff clarity

Wednesday, 9 July 2025

• Signs and portents for the U.S. economy:

• Trump announces 50% tariff on copper effective August 1

• Where does the US get its copper?
• Copper glut driven by tariff threat to deflate US price bubble

US sets 50% tariffs on Brazilian imports starting in August

Oil falls amid bearish Trump tariff outlook

• OPEC trims oil demand for next four years, says no peak in sight

Fed minions having trouble reading the U.S. economy:

• Fed minutes show little support for interest rate cut later this month
• FOMC Minutes Show ‘Divided’ Fed Fears Stagflation, Clueless On Actual Tariff Impact

Bigger stimulus developing in China:

• China’s June lending seen tripling as trade truce holds

BOJ minions happy to see less inflation, thinking about pausing interest rate hikes:

• Japan’s wholesale inflation slows, relieves interest rate-hike pressure
• BOJ will hold off rate hikes until March due to US tariff hit, ex-policymaker says

ECB minions take time out from worrying about tariffs to worry about everything else:

• ECB warns of risks beyond tariffs: from security to capital flows

Stocks snap two-day losing streak, Nasdaq ends at record as Nvidia hits $4T in market cap

• Wall Street rises as Fed minutes put rate cuts in focus, Nvidia hits $4 trillion milestone

Thursday, 10 July 2025

• Signs and portents for the U.S. economy:

• Trump puts 35% tariff on Canada, eyes 15%-20% tariffs for others

Fed minions thinking about two rate cuts later in 2025, want to keep shedding assets off balance sheet:

• Fed’s Daly says two rate cuts remain on the table for this year
• Fed’s balance sheet drawdown likely can continue for some time, Waller says

• Fed’s Waller says stablecoins could lower payment prices

White House slams Powell over Fed finances, project cost overruns

Bigger stimulus developing in China:

• China’s export growth expected to edge up in June amid delicate truce with US: Reuters poll
• China Property Stocks Erupt On Rumors Beijing May Revive 2015 Stimulus Playbook

• China’s Big Housing Stimulus Rescue Is Wishful Thinking

S&P 500, Nasdaq notch record closes after solid bond sale, lack of tariff surprises

• S&P 500, Nasdaq post record closes, Nvidia closing valuation $4 trillion

Friday, 11 July 2025

• Signs and portents for the U.S. economy:

• Oil rises over 2% as investors weigh market outlook, tariffs, sanctions

Fed minion ready to keep waiting for data they want to see to justify inaction:

• Fed’s Goolsbee: Need to wait until anxiety recedes to feel comfortable about outlook

Bigger trouble, stimulus developing in China:

• China’s GDP growth set to slow, raising pressure on policymakers: Reuters poll
• Chinese province says OK for officials to hustle on the side in tepid economy

BOJ minions say Japan’s economy doing okay with U.S. tariffs:

• BOJ sees firms taking US tariffs in stride but cautious on outlook

ECB minions send mixed messages about direction for Eurozone interest rates:

• ECB’s Schnabel sets bar ‘very high’ for rate cut as economy holds up
• ECB should ease monetary policy if disinflationary trends intensify, Panetta says

S&P 500 ends down as tariffs sour sentiment

• U.S. stocks end the week slightly lower as traders parse Trump’s tariff moves

The Atlanta Fed’s GDPNow tool projection of real GDP growth in the U.S. during the current quarter of 2025-Q2 dipped to +2.6% from the +2.9% level forecast the previous week.

Image credit: Microsoft Copilot Designer. Prompt: “An editorial cartoon of a Wall Street bull and a bear at a restaurant where the server is a Federal Reserve official who won’t tell them if any rate cuts are on the menu”. We then tweaked the original image by prompting Copilot to “redraw the picture so the bear is wearing a suit and also make the picture more colorful”, and then to “change the waiter’s comment to “Rate cuts? I’m afraid I can’t say if they’re on the menu or not…” and to “change the font of the waiter’s comments to Comic Sans”. For the final result, we adjusted the spacing of the waiter’s dialogue in the first line and manually inserted the question mark after “Rate cuts” to produce this edition’s editorial cartoon.

The way we see it, if we’re going to use AI to generate the images and editorial cartoons that accompany these articles, we owe it to our readers to explain how we generated them.