We start off the overnight wrap up with the usual place, China, where in a mirror image of Wednesday's action, stocks once again started off uneventful, then gradually rose in the afternoon session and meandered near unchanged territory until the last half hour, when out of the blue they tumbled to close near the day's low, some 2.2% below yesterday's closing level.

Bloomberg adds that drugmakers and technology companies led declines. A gauge of 100-day price-swings rose to the highest level in six years. Trading volumes in Shanghai have halved from their peaks in June, while margin debt, which had fueled a world-beating rally for China’s stocks, declined to a four-month low.

All 10 industries in the CSI 300 slid more than 2 percent, led by a 4.1 percent slump in the gauge of health-care companies. Lepu Medical Technology Co. plunged 8.3 percent, while Hualan Biological Engineering Inc. slid 5.2 percent. The drug sub-index has been the best performer over the past three month, falling 5.6 percent versus the 20 percent slump for the CSI 300.

Volatility has increased this week as Monday’s 8.5 percent plunge by the benchmark gauge shredded a calm induced by unprecedented state intervention.

“There were no major macro developments,” said Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co. in Shanghai. “The disconnect with fundamentals continues making trading challenging.”

What caused it? It is unclear why the government would step away from the bid despite the PBOC injecting liquidity for the 11th consecutive day, just as everyone was selling in an attempt to capture the EOD upside as telegraphed the day before, or perhaps the selling was just too violent.

One possible catalyst came from Reuters which reported that that Chinese banks were investigating their exposure to the stock market via wealth management products and loans backed by stock as collateral.If true, since this was the catalyst that also ended the steep ascent of mega fraud Hanergy, one can see why Chinese gamblers would be concerned and rush to take profits.

And with every close on a down tick forcing the PBOC and the politburo to implement even more "anti-panic" regulations which merely reinforce the lack of faith in a normal market, expect the situation to get worse before it gets better.

With China out of the way, it brings us to the main event of the day: the first estimate of US Q2 GDP release which also will incorporate the annual revision to GDP growth with the widely mocked and goalseeked "second seasonal adjustments" part of historical GDP, whose only purpose will be to remove the negative Q1 GDP print from 2014 and 2015.

This is how BofA sees today's GDP release:

• The first estimate of 2Q GDP is likely to show growth of 3.0%, which would be a bounce from the contraction of 0.2% in 1Q. However, it is important to remember that the history will be revised along with this report. The annual GDP revisions will alter the trajectory of growth, particularly over the past three years. There will be a change to the seasonal adjustment process which should push up growth in 1Q, reflecting stronger seasonal factors, but potentially lower the later quarters. This adds additional uncertainty around forecasting 2Q GDP growth
• The annual revision to GDP growth on July 30th will adjust estimates of growth over the past few years. If growth is indeed revised higher it would help solve the puzzle of low productivity growth.
• This will also be the first release of the new GDP and GDI composite. This will show a stronger trend of growth given that GDI has outpaced GDP recently.
• Taking a step back and examining a range of indicators reveals an economy expanding at a mid-2% pace, largely consistent with the Fed’s forecasts.
• Although it is hard to say with any certainty, we believe GDP growth is likely to be revised up modestly. This will likely leave the Fed comfortable arguing that the economy is making progress closing the output gap, allowing a gradual hiking cycle to commence.

Actually it is rather easy to say with certainty that this is precisely what will happen, which however may be a clear case of good news is bad news (for stocks), since a substantial upward revision to GDP data will greenlight Yellen to hike rates that much sooner. As a reminder the current Atlanta Fed estimate has Q2 GDP at 2.4%. Will it be the closest forecast again? Find out in just over 90 minutes.

Back to markets where aside from China, Asian equities traded mostly higher following a strong lead from Wall Street, as the Fed failed to yield any definitive clues as to when a Fed rate-lift off would occur. Nikkei 225 (+1.1%) outperformed amid a slew of strong corporate earnings, coupled with Industrial production growing at its fastest rate in a year (2.0% vs. Exp. 1.3%); yet another tumble in the JPY certainly helped push stocks higher. ASX 200 (+0.8%) was led higher by miners after iron ore prices rose 4.6%. Finally, JGB's fell in conjunction with USTs as the demand for safer assets subsided following the broad based gains in Asian indices.
 
Today has seen the busiest day of earning season so far in Europe and as such company specific news has dictated market movements . A host of large cap names all reported, including heavyweights Siemens (+3.0%), Shell (+2.8%), Deutsche Bank (+2.6%), AstraZeneca (+2.1%), Sanofi (-0.4%) and Santander (-1.9%), with the IBEX underperforming (-0.6%, Euro Stoxx: -0.1%) after being weighed on by Santander, with all other indices trading in the green.

Yesterday saw Facebook Inc (FB) report after the close, with Q2 Adj. EPS USD 0.50 vs. Exp. USD 0.47, CFO says they are affected by currency headwinds. Q2 revenue USD 4.04bIn vs. Exp. USD 3.99b1n. Q2 MAU's 1.49bIn vs. Exp. 1.475bIn Q2 DAU's average of 968m1n vs. Exp. 970.5mln. High profile US earnings include US earnings including P&G, Time Warner Cable and Teva pre-market, while Amgen and Linkedln report after the close.

The USD-index has spent the European morning in positive territory, however coming off its highest levels heading into the North American crossover, with participants initially reacting to the FOMC meeting yesterday, whereby no clear clues were given as to when a Fed rate hike but with the FOMC highlighting that job gains had been 'solid' ., while elsewhere we have seen a spate of German data, with German regional CPIs painting a mixed picture and unemployment change (9K vs. Exp. -5K) coming in marginally higher than expected, with the 9000 unemployed breaking a 9 month run of improvements in employment.

In line with the mixed regional German CPIs, we have seen choppy price action in Bunds, with the German benchmark outperforming its US and UK counterparts following the mixed data with T-Notes lower on the back of the aforementioned Fed statement last night.

USD strength has weighed upon gold, with the yellow metal falling USD 11.00 to break below USD 1185 in early European trade with some attributing the move to a large fund sale after liquidating a position on the back of last night's Fed announcement. WTI and Brent both trade in modest positive territory this morning after seeing strength yesterday on the back of DoE's, with the latest move higher being attributed to reports from WSJ that Saudi Arabia are to lower production from record level.

In summary: European shares remain higher, close to intraday highs, with the oil & gas and tech sectors outperforming and autos, telcos underperforming. Companies including Siemens, Deutsche Bank, Shell, AstraZeneca, Diageo, RBS, BT, ABI, Swiss Re, Sanofi, Infineon, Renault, EDF, Telefonica release  earnings/statements. Spanish 2Q GDP in line with quarterly growth est., Swedish GDP above. Japanese industrial output above estimates. The Dutch and French markets are the best-performing larger bourses, Spanish the worst. The euro is little changed against the dollar. Italian 10yr bond yields fall; French yields decline. Commodities gain, with nickel, zinc underperforming and Brent crude outperforming. U.S. jobless claims, continuing claims, Bloomberg consumer comfort, GDP, personal consumption, core PCE due later.

Market Wrap

• S&P 500 futures up 0.1% to 2103.2
• Stoxx 600 up 0.6% to 396.3
• US 10Yr yield up 2bps to 2.31%
• German 10Yr yield down 2bps to 0.7%
• MSCI Asia Pacific unchanged at 140.8
• Gold spot down 0.9% to $1086.7/oz
• Eurostoxx 50 +0.5%, FTSE 100 +0.7%, CAC 40 +0.8%, DAX +0.7%, IBEX -0.2%, FTSEMIB +0.6%, SMI +0.6%
• Asian stocks little changed with the Nikkei outperforming and the Shanghai Composite underperforming; MSCI Asia Pacific up 0% to 140.8
• Nikkei 225 up 1.1%, Hang Seng down 0.5%, Kospi down 0.9%, Shanghai Composite down 2.2%, ASX up 0.8%, Sensex up 0.5%
• 7 out of 10 sectors rise with materials, energy outperforming and tech, health care underperforming
• Euro down 0.09% to $1.0974
• Dollar Index up 0.28% to 97.25
• Italian 10Yr yield down 7bps to 1.84%
• Spanish 10Yr yield down 5bps to 1.9%
• French 10Yr yield down 3bps to 0.98%
• S&P GSCI Index up 0.6% to 387.2
• Brent Futures up 1.5% to $54.2/bbl, WTI Futures up 0.8% to $49.2/bbl
• LME 3m Copper down 0.8% to $5284/MT
• LME 3m Nickel down 1.6% to $11075/MT
• Wheat futures up 0.8% to 500.3 USd/bu

Bulletin headline summary from RanSquawk and Bloomberg:

• The USD-index has spent the European morning in positive territory as participants react to the FOMC meeting yesterday
• Today has seen the busiest day of earning season so far in Europe and as such company specific news has dictated market movements
• Today's US data includes GDP Advanced reading, Core PCE and weekly jobs numbers
• Treasuries fall for a third day before
  week’s supply concludes with $29b 7Y notes; WI yield 2.055% vs
  2.153% in June.
• Chinese stocks fell suddenly in the last hour of trading, almost wiping out Wednesday’s rally and leaving investors in the dark about reasons for the moves
• Trading was almost a reverse image of the previous day, when the Shanghai Composite surged in the last hour to close 3.4% higher
• Greece’s Prime Minister Tsipras confronted rebels within his own party for not backing him, in a showdown that could put Europe’s most indebted state on course for snap elections
• Members of German Chancellor Angela Merkel’s coalition are seeking to amend euro-region rules to ensure private investors bear the brunt of an insolvency by a member state of the currency union
• Euro-area economic confidence hit a four-year high this month; outlook may be bolstered by bailout deal that averted Greece’s exit from euro
• Saudi Arabia’s recent overtures to other partners suggest the U.S./Saudi relationship is going through another reappraisal because of the landmark accord with regional rival Iran
• Sovereign 10Y bond yields mixed. Asian stocks mixed; European stocks gain U.S. equity- index futures lower. Crude oil higher, copper and gold lower

US Event Calendar

• 8:30am: GDP Annualized q/q, 2Q A, est. 2.5% (prior -0.2%)
  • Personal Consumption, 2Q A, est. 2.7% (prior 2.1%)
  • GDP Price Index, 2Q A, est. 1.5% (prior 0%)
  • Core PCE q/q, 2Q A, est. 1.6% (prior 0.8%)
• 8:30am: New Advance Report on U.S. International Trade in Goods
• 8:30am: Initial Jobless Claims, July 25, est. 270k (prior 255k)
• Continuing Claims, July 18, est. 2.205 (prior 2.207m)
• 9:45am: Bloomberg Consumer Comfort, July 26 (prior 42.4)
• 1:00pm: U.S. to sell $29b 7Y notes

DB's Jim Reid completes the overnight wrap

If you believed the Fed would raise rates in September before yesterday's FOMC statement then you probably won't have changed your mind. They kept their options open but did add a sentence suggesting that job gains have been "solid" which hinted at their confidence in the economy. However if you're one of the doves then you'll be pleased they removed the phrase “energy prices appear to have stabilized. However if they hadn't it would have been strange given recent moves. The most interesting change from the last statement was the tweak to its forward guidance as it added the word “some” to this sentence - “The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen SOME further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.” Does this mean the bar has been lowered for what they need to see to pull the trigger. It’s still pretty vague and no doubt thousands of analysts around the globe will be spending hours debating the addition of a single word. For us there are still great risks in starting a hiking cycle with the great fragility in the global economy and financial system, however the Fed don't seem to share such a view and it's going to be a close call for September. Much probably depends on the two interim payroll reports and whether commodities stabilise.

There was fairly minimal reaction in the Fed Funds market in the aftermath of the statement, although we’ve seen more material moves overnight. Yesterday the Dec15 contract closed unchanged at 0.310% (where it’s been all week) while the Dec16 contract rose 1bp to 1.010%. This morning however we’ve seen the respective contracts move +1.5bps and +4.0bps higher. With that, Bloomberg is now reporting that the probability of a hike by September based on the futures market is priced at 42% (up from 38% on Tuesday) while the probability of a move by December is currently priced at 74% (up 4% from Tuesday).

The main mover yesterday was the Greenback with the broader Dollar index, although plunging 0.3% in the initial moments following the release, bouncing back half a percent to close +0.21% as the market slowly digested some of the minor tweaks in the language. In truth this was the only notable price mover following the statement. 10y Treasury yields closed 3.6bps higher at 2.286% which was where they were leading into the statement. Risk assets had a firmer day all round although again the bulk of the gains had been realized preFOMC with fairly minimal reaction post the statement. A boost from energy and industrials stocks in particular helped the S&P 500 close +0.73% while the Dow (+0.69%) and NASDAQ (+0.44%) also closed up. In credit CDX IG finished three-quarters of a basis point tighter while the CDX HY spread tightened 9bps. In the commodity space meanwhile Gold closed +0.13% at $1097/oz while WTI (+1.69%) and Brent (+0.15%) rebounded off the day’s lows following the latest US inventory data which showed a surprise fall in crude stockpiles.

As well as the move in Fed Funds contracts this morning, 10y Treasury yields have moved 2.7bps higher in the Asia session this morning while the Dollar index is +0.3%. As we hit the midday break in China meanwhile, the Shanghai Comp (-0.04%), Shenzhen (-0.12%) and CSI 300 (-0.19%) are all a touch lower in another choppy session where bourses have swung between gains and losses (albeit in a small range). Elsewhere bourses are generally mixed. The Nikkei (+1.06%) is leading gains on the back of a stronger than expected industrial production reading (+0.8% mom vs. +0.3% expected) while the ASX (+0.68%) is also firmer. The Hang Seng (-0.07%) and Kospi (-0.90%) are lower in trading this morning though.

Earnings yesterday were generally supportive in the US. Gilead Sciences, General Dynamics and Northrop Grumman in particular were some of the more notable beats to lead the gains, although after the closing bell Facebook tumbled 4% in extended trading after a disappointing quarterly report. With 288 companies in the S&P 500 having now reported, earnings beats are unchanged versus Tuesday at 76% while sales beats have ticked up 1% to 51%. M&A activity is also continuing to be supportive for markets on both sides of the pond at the moment. Bloomberg is reporting that $426bn of deals have been announced so far this quarter which, if it continues at the current rate, is set to pass the record for any third quarter set back in 2007 when $983bn of deals were made.

Yesterday’s data flow in the US came in the form of pending home sales for June which disappointed having slumped 1.8% mom during the month (vs. +0.9% expected), the first drop this year. Over in Europe we saw German consumer confidence print in line at 10.1 although there was a modest tick down in consumer confidence in France, falling to 93 (vs. 94 expected). In the UK June mortgage approvals data was supportive at 66.6k (vs. 66.0k expected) while net consumer credit was a touch ahead of expectations (£1.2bn vs. £1.1bn expected). Equity bourses closed broadly higher in Europe yesterday, with the Stoxx 600 (+1.02%), DAX (+0.34%) and CAC (+0.81%) all rising for the second consecutive session. Sovereign bond yields moved steadily higher meanwhile on the back of the generally more positive tone with 10y Bunds in particular finishing +2.7bps at 0.715%.

One event which will be worth keeping an eye on today is in Greece where the Syriza Central Committee is due to meet for the first time since the actual agreement was reached in what will likely be a tense session. It’s expected that the Central Committee is to decide the timing and logistics of an emergency congress on the back of the high number of lawmakers who didn’t back the agreement with the radical members of the committee likely to push for a congress immediately (and so aim to block the agreement). Tsipras has suggested he would want an emergency congress in September (so as to increase the chances of an agreement in the interim) with the possibility of a general election thereafter.

Taking a look at today’s calendar now, it’s going to be a fairly busy day for data and we start this morning in Germany with the July CPI and unemployment reports. Euro area confidence indicators for July are also expected. With the FOMC out of the way the focus this afternoon now turns to the US Q2 GDP reading and the three years’ worth of revisions which are also due to be released and which may partially address the recent historical pattern of weak growth in Q1. Market expectations are currently set at 2.5% for Q2 which is line with the forecast of DB’s Joe Lavorgna while the Atlanta Fed GDPNow model is forecasting for a 2.4% reading. Elsewhere we’ll also get the Core PCE print as well as initial jobless claims. On the earnings front the highlights include Time Warner, ConcoPhillips and Proctor & Gamble.