Forward guidance will be in the spotlight at the upcoming FOMC meeting

RBC Capital Markets notes:

Forward guidance (or lack thereof) will be in the spotlight at the upcoming FOMC meeting (no press conference). At Yellen's congressional testimony she did not rule out a September hike, nor did she guide the market toward thinking September was a done deal. We think the upcoming FOMC statement will reflect this noncommittal approach. In other words, there will be no explicit tweak to the guidance signaling a hike is imminent. September remains our call and may also be the Fed's best opportunity to liftoff. 

However, our US rates team argues aesthetics matter to a data dependent Fed and they have made it a point to suggest this cycle will be less predictable, with decisions made on a meeting-to-meeting basis. As a result, we think the Fed will opt to keep their options open and use the seven weeks between the September and July meetings to firm up their decision. 

Also out this week is the first cut of US Q2 GDP (Thu). We think it will print a firm +3.8%, with the consumer putting in an impressive quarter near 3%. We also expect substantial contributions from the residential space +0.7 ppt) and net exports (contributing +0.9 ppt). The annual revision to GDP will also be reported and here the focus will be on how the BEA addresses the residual seasonality issue given the weaker Q1s in recent years. Should Q1 be rebalanced significantly, this could result in a lower Q2 print simply due to a tougher comp.