Japanese Yen at 24-Year Low

STOCK INDEX FUTURES

Stock index futures are lower in advance of Federal Reserve Chair Jerome Powell’s monetary policy testimony before the Senate Banking Committee at 8:30 central time.

Tomorrow Powell will testify on monetary policy before at House Financial Services Committee at 9:00.

The dominant influences remain the hawkish Federal Reserve, economic headwinds and geopolitical tensions.

Futures are likely to remain under pressure in advance of Powell’s testimony, and at least partially recover after his testimony is over.

CURRENCY FUTURES

The U.S. dollar index is higher as interest rate differential expectations remain favorable to the greenback.

The annual inflation rate in the U.K. increased to 9.1% in May from 9.0% in the previous month, the highest since 1982 and in line with market expectations.

The Japanese yen fell to its lowest level against the U.S. dollar in 24 years before a recovery.

The Bank of Japan’s ultra-easy monetary policy continues to diverge from other major central banks.

INTEREST RATE MARKET FUTURES

The Treasury will auction 20-year bonds today.

Other Federal Reserve speakers today are Thomas Barkin at 8:00 and again at 11:00, Charles Evans at 11:55, Patrick Harker at 12:30 and Thomas Barkin at 12:30.

There is a 90.9% probability that the Federal Open Market Committee will hike its fed funds rate by 75 basis points and a 9.1% probability that the rate will increase by 50 basis points at the July 27 meeting.

Copper, which is a metal with a history of predicting economic downturns, fell to below $3.90 per pound, which is the lowest since early 2021 and is down more than 20% since its March peak due to increasing fears of a global economic slowdown.

Currently the Federal Reserve’s focus is clearly on inflation, while a slowing economy will be problem for the Fed to deal with later.

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