Stock index futures rose on Tuesday as Federal Reserve Chairman Jerome Powell prepares to deliver his semiannual monetary policy report to the Senate.
S&P 500 Futures (Santa Clara Stock Exchange) +0.2%Nasdaq 100 Futures (US100:IND) +0.3% and Dow futures (INDU) were flat.
The 10 years Treasury bond yields (US10Y) rose 2 basis points to 4.30%. The 2-year yield (US2Y) held steady at 4.65%. See how other yields traded across the entire yield curve here.
Wall Street closed mixed on Monday, with the S&P 500 and Nasdaq Composite closing at record highs.
“As far as the US economy is concerned, attention is increasingly focused on the June CPI report due out on Thursday and whether that could open the door to a Fed cut as early as September,” said Jim Reid of Deutsche Bank.
Powell will speak before the Senate Banking Committee today, followed tomorrow by the House Financial Services Committee.
“It will be interesting to see if he has any comment on the weaker data over the last few days,” Reid said.
“The question is whether Powell will be able to answer the insightful questions that may be raised. If US inflation is lower than in Europe, why is the Fed not cutting rates? Why emphasize reliance on data when the data is unreliable and policy is delayed?” said Paul Donovan of UBS.
The best that can be hoped for today is probably an acknowledgement of some of the recent weaknesses in the data and the possibility of a rate cut in September being maintained, Donovan added.
“Powell is likely to emphasize today that the Fed would cut interest rates quickly in this scenario, resulting in a further downward shift in rate expectations,” Pantheon Macroeconomics said.
The results of a $58 billion three-year bond auction are also due later today.
