Better economic data going into the Federal Reserve announcement this afternoon (EST), likely takes dovish Fed off the table. The Commerce Department released its first read on U.S. GDP for the second quarter this morning at 1.7% which beat the 1% consensus estimate. The ADP payroll report for July was 200K vs. 180K estimate with gains likely coming from improvements in housing over the past few weeks. The 10-year Treasury clicked higher to 2.7% from yesterday’s 2.6% close. We expect no action taken today by the FOMC and will likely reiterate thresholds for inflation and unemployment.
Because of today’s Federal Reserve announcement and month end, electronic trading using algorithms will use modified distributions for US equity trading. Volume will be skewed toward the end of the day with a much larger than usual level of volume occurring after the Fed announcement. Expect to see roughly 47% of volume after 2:00 pm EST with 4% on the close which compares to 37% and 2.5% respectively on a normal day.