Is US rate hike still on the table?

Yesterday's positive US GDP data matches the positive sentiment on the markets. The data illustrated once again that first estimates from the US are not very resilient. A rather small rise in Q2 of annualised 2.3% turned into an impressive 3.7% (qoq). 

That would be well above potential growth rates. Could that be the straw that breaks the Fed's back and causes it to hike rates after all in just under three weeks' time? For the time being the market does not yet want to really bet on that following yesterday's data. 

"For that to be the case we would have to hear some clearly more aggressive comments from the Fed in Jackson Hole this weekend followed by a super strong labour market next week. And of course the recent recovery on the Chinese stock markets would have to turn out to be more than just a flash in the pan", says Commerzbank. 

However, there is some data due for publication today that FOMC members will pay attention to. First of all there is some price data in the shape of the PCE deflator which is of particular significance for the Fed. However, mom changes are likely to be limited. 

"There is even a chance that everything will remain unchanged yoy at 0.3% (core rate +1.3%) in July. 90 minutes later the University of Michigan's poll will then provide insight into consumer sentiment in the second half of August while also providing information on the inflation expectations of those polled. Long term the latter was quite stable at 2.7%, the last thing the Fed needs would be a fall", added Barclays.