The Tuesday Market Minute
- Global stocks mixed as investors prepare for a key appearance on Capitol Hill from Federal Reserve Chairman Jerome Powell.
- Stocks look to retreat from the strongest rally in months yesterday as markets jostle for position following last week's hawkish shift, with equity volatility easing from a four-week high.
- Benchmark 10-year note yields hold at 1.50% following yesterday's volatile session while the dollar index rising to a multi-week high against its global currency peers.
- Bitcoin tumbles nears the $30,000 as China crackdowns on mining operations, as well as the hangover from last week's Titan collapse, continues to cloud crypto markets,
- CDC data shows 150 million Americans have now been fully vaccinated against the coronavirus, with around 318.6 million doses administered as of Monday.
- U.S. equity futures suggest a modestly firmer open on Wall Street ahead of existing home sales data at 10:00 am Eastern time and Congressional testimony from Fed Chair Powell at 2:00 PM Eastern time.
U.S. equity futures edged higher Tuesday as markets paused from one of the strongest rallies on Wall Street in months yesterday to prepare for a key appearance on Capitol Hill from Federal Reserve Chairman Jerome Powell.
With investors in a serious quandary with respect to to the Fed's assessment on growth and inflation, and its plans to slow the pace of monthly bond purchases sometime later this year, Powell's Congressional testimony will be key in establishing a sense of timing from the Fed's hawkish shift, which caught markets off guard last week and triggered some of the most extreme Treasury market volatility we've seen in several months.
"We at the Fed will do everything we can to support the economy for as long as it takes to complete the recovery," Powell said in prepared remarks for his 2:00 PM Eastern time appearance, and repeated his view that inflation pressures, which have lifted headline CPI readings to the highest levels in more than a decade, will fade into the end of the year and again in early 2022.
Benchmark 10-year note yields, which whipsawed amid 17 basis point moves yesterday, were steady at 1.50% in overnight trading ahead of today's $60 billion auction of 2-year notes while the dollar index gained 0.23% against a basket of it global peers to trade at 92.108.
Futures contracts tied to the Dow Jones Industrial Average are looking for a modest 50 point addition to yesterday's 590 point rally, the best since early March, while those linked to the S&P 500 are priced for a 6.5 point gain. Nasdaq futures are indicating a 35 point bump for the tech-focused benchmark.
After hitting the $75 per barrel mark for the first time in more than two years on Monday, global oil prices are modestly lower with the firmer U.S. dollar pushing down prices ahead of the American Petroleum Institute's private reading of domestic crude stockpiles later today.
WTI futures for July delivery were marked 52 cents lower from yesterday's close in New York at $72.59 per barrel while Brent contracts for August fell 47 cents to $74.43 per barrel.
Bitcoin, meanwhile, extended its recent slump, trading as low as $29,825 each on European markets amid reports of temporary system failures at online exchange operators Binance.
Overnight in Asia, the Nikkei 225 in Tokyo powered to its biggest one-day gain of the year on the heels of Wall Street's rebound, rising 3.12% to close at 28,884.13 points. Broader Asia stocks, however, edged 0.11% lower heading into the final hours of trading.
Comments yesterday from European Central Bank President Christine Lagarde eased some concerns that policymakers in Frankfurt would follow the Fed's lead, but stocks turned lower in muted volumes Tuesday heading into Powell's testimony later this afternoon, with the Stoxx 600 slipping 0.14% and the FTSE 100 edging 0.22% higher in London.