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Stimulus is wearing off and the economy is trying to gain recovery traction on its own (with the help of a 0.00-0.25% Fed Funds Rate). While the macroeconomic recuperation will be a long, bumpy process with many ups and downs, the FOMC feels they have done enough to grant the system an opportunity to build momentum on its own. In the meantime, if a lack of confidence leads economic output lower and double dip concerns grow, the Fed remains at the ready to prop the markets and deter contagion. ...

Uncertainty remains as to whether Greece will resolve its debt issues, but markets around the globe were mostly higher Tuesday and the euro recovered slightly from its earlier beatings. In the US, equity futures are pointing higher following the long weekend. One hour before the opening bell, Dow futures are up 28 points to 10,145 while the S&P 500 looks to open 4.30 points higher at 1,083.40. Last week the Dow and the S&P 500 each saw a gain of 0.9% ― for the latter it was the first weekly advance in more than a month....

Housing data will be center of attention on Tuesday with the release of U.S. new home sales for July and the June Case- Shiller Home Price Index.

U.S. new home sales are expected to fall 0.9% to 525k in July following June's decline of 0.6%. Meanwhile, the Case-Shiller home price composite for June is expected to fall 16.2% year-over-year following May's 15.8% decline.

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In unusually explicit language, the minutes of the Federal Open Market Committee's (FOMC) April 29-30 meeting said the decision to cut rates at the last meeting was "a close call" and that policy-makers will be reluctant to further cut rates even in the face of negative growth.

"Most members viewed the decision to reduce interest rates at this meeting as a close call...

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After the FOMC cut rates 25 bps to 2.00% on April 30 and signalled a pause in monetary policy loosening, economists will be attentive to any commentary explaining the short- and long-term inflation outlook in the United States in the release of the FOMC's minutes on Wednesday.

Dawn Desjardins, assistant economist at RBC, expressed concerns about "inflation and indications that inflation expectations have been on the rise in recent month in late April, although policy-makers retained a forecast that inflation will moderate."

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