Fed Chair Powell’s Testimony at 9:00
STOCK INDEX FUTURES
At 9:00 central time Federal Reserve Chairman Jerome Powell will deliver the central bank’s semiannual report on the economy and monetary policy to Congress during two days of testimony beginning with the Senate Banking Committee.
Mr. Powell is likely to signal that easy money policies will remain for the foreseeable future. In addition, he will likely face questions on the next fiscal stimulus package, interest rates, bond purchases and the potential for inflation to increase.
The House of Representatives Budget Committee yesterday approved the $1.9 trillion economic relief package, and a full House vote is anticipated later in the week. The Senate is expected to vote next week.
The 9:00 central time consumer confidence index is expected to be 90 and the 9:00 February Richmond Federal Reserve manufacturing index is anticipated to be 14.
Stock Index futures are likely to recover after Fed Chair Powell’s testimony.
After making a seven-week low in the overnight trade, the U.S. dollar index is higher now.
The euro currency is lower after European Central Bank President Christine Lagarde on Monday said the ECB was closely monitoring bond yields, which suggests the ECB is unhappy with their recent rise.
The British pound advanced to its highest level against the U.S. dollar in nearly three years.
The headline U.K. unemployment rate edged up to 5.1% in December, as expected. However, data also showed that the number of people claiming benefits dropped by 20,000 in January, rather than increasing as analysts had estimated.
Markets in Japan are closed today for a public holiday.
The Australian dollar advanced to a 36-month high against the U.S. dollar as investors become more optimistic on the prospects of faster growth.
INTEREST RATE MARKET FUTURES
Futures are mixed today. However, increased inflationary expectations have recently pressured futures at the long end of the curve.
Dallas Federal Reserve President Robert Kaplan on Monday repeated that he expects the U.S. economy will grow at about a 5.0% rate this year.
The Treasury will auction 2-year notes today.
In light of the Federal Reserve pledging not to hike its fed funds rate until possibly 2023, futures at the short end of the curve are likely to hold steady.