Post-Fed, Markets Shift Focus to U.S. Q2 GDP

After the Federal Reserve decided to keep interest rates steady on Wednesday, the market began to focus on the upcoming release of the U.S. second quarter gross domestic product (GDP) report, which is set to be published on Friday.

With the second quarter now finalized, the advanced data will indicate how the U.S. economy performed during the April to June period. Analysts initially anticipated a growth of 2.6%, a significant increase from the 1.1% growth observed in the first quarter.

However, expectations were tempered following disappointing durable goods data released on Wednesday. Both Morgan Stanley and JP Morgan revised their growth outlooks down to 2.2% from 2.3%, citing slightly weaker projections for fixed investment and inventories.

Similarly, another institution adjusted its estimate from 2.4%, though it had not updated its projection since mid-July due to the restrictions around the Fed’s policy meetings. Its next update will occur after the GDP data is released and will likely focus on third-quarter projections, which had also been set at 2.6%.

On Thursday, there may be further revisions to Q2 GDP expectations with the release of the June data at 12:30 GMT.

In addition to Friday’s GDP figures, market participants will closely monitor data that relates directly to the Fed’s dual mandate. Next week, the Fed’s preferred inflation measure for June is set to be released on Tuesday, followed by the employment report for July which will be made available on Friday.