Upcoming FOMC and GDP release in focus amid improving data

International developments moved to the back seat this week, as the risks stemming from Greek debt crisis and China’s equity market eased off for now. However, renewed weakness in commodity sector and concerns over corporate profitability weighed on market sentiment. 

The domestic data flow remained relatively upbeat. Initial jobless claims fell to a multi-decade low. Existing home sales rose by 3.2% in June to a new cycle high. New home sales disappointed, declining by 6.8% in June, however they were still up 18% relative to a year ago.

Next week should bring further evidence of a rebounding economy, with second quarter GDP reading expected to show a 2.5% gain. The upturn in economic data is likely to be recognized in the Fed’s July interest rate announcement, which we expect to set the stage for September rate liftoff.