Tuesday marks the beginning of the July Federal Open Market Committee (FOMC) meeting of the Federal Reserve. This is a two-day meeting and the FOMC meeting announcement is slated for around 2:00 p.m. Eastern Time on Wednesday. The outcome of this meeting is not whether rate hikes will be announced. The two issues that will be watched are for further tapering and the timing of future rate hikes.

On the tapering, the FOMC and Federal Reserve presidents have almost unanimously signaled that the same $10 billion will be trimmed in monthly bond buying for Treasury notes and for mortgage-backed securities. We have seen absolutely no reason at all for this pace to escalate or slow, implying an October/November end of all Treasury bond buying with new money. We do expect that the Fed will continue reinvest principal from existing maturities and prepayments on its books.

On the interest rate front, we are not looking for any shock or surprise. The FOMC is expected to communicate that interest rates will remain very low for an extended period. As of Monday, the fed funds futures were still signaling an April-May 2015 transition period where we get to a 0.25% fed funds rate.

Those same fed funds futures do not show a 1.00% fed funds rate being priced in until the Feb.-March period of 2016.

The FOMC will get a first look at the preliminary second-quarter GDP due on Wednesday morning. This is the first look, and it will be interesting to see how much of a snapback there was from the 2.9% drop in GDP during the first quarter.

Unemployment and payrolls is not due until Friday, but you can likely count on the notion that the FOMC will at least have an idea of the direction of that news even if the Labor Department does not have the formal report compiled as of yet.

ALSO READ: Why GDP Could Trump Unemployment in Importance This Week

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