The markets have turned to jobs data for the next clues about interest rates.
First, on Thursday, ADP releases private-sector payrolls for June, and that could be a warmup act for the big Friday government jobs report. However, markets are more clearly fixated on that government data and whether wages show much of an uptick, in any possible sign of inflation.
Inflation remains a hot topic in the market. The Fed Wednesday noted in the minutes of its last meeting that the drop-off in inflation was still a concern for some of its members, but it was mostly viewed as a temporary issue, reflecting "idiosyncratic factors." Any pickup in inflation could prompt speculation that the Fed could move sooner.
The fact that Federal Open Market Committee members also raised questions in the minutes about whether the Fed should barrel ahead with its plan to wind down its $4.5 trillion balance sheet cast some doubts on the path for interest rates. The market already has been doubting the Fed will be able to raise interest rates for a third time this year, as it has forecast.
"This introduces uncertainty into the timing of the next hike as well," noted Alan Ruskin, head of G-10 currency strategy at Deutsche Bank. But other market pros said they didn't see much of a change in the Fed's commentary and the economic data will be what drives rate decisions.
Market expectations are for the Fed to slow down the purchases of Treasury and mortgage securities by as much as $10 billion a month starting in September. The Fed is then expected to hike rates in December.
Some economists, though, expect the reverse sequence. They see the Fed raising rates first in September, and then taking action to taper back on the purchases of Treasurys and mortgage securities in December.