Mr. Powell Goes to Washington

Mr. Powell Goes to Washington By Vicky Ge Huang

Federal Reserve Chair Jerome Powell is set to testify before Congress this morning, and Wall Street will be closely following his comments for clues on when interest-rate cuts could begin. Meanwhile, Thursday's inflation report is set to be the main event for U.S. markets this week. And new exchanges allow people to trade event contracts, adding credibility to a relatively new-and risky-financial instrument. Read on for this news and more.

Top News Fed Chair Jerome Powell to Address Congress

Federal Reserve Chair Jerome Powell will begin his two-day testimony before Congress at 10 a.m. ET on Tuesday .

Powell will deliver his semiannual monetary policy report and then address the Senate Banking Committee. On Wednesday, he will address the House Financial Services Committee.

Powell has stressed that the Fed wants to see more evidence that inflation is cooling before cutting interest rates, which remain at their highest level in more than two decades.

Pro Take: Housing Inflation Sticks, While Prices for What Fills a House Fall

Housing and rent inflation hums along at 5.4% more than two years after the Federal Reserve began hiking interest rates to cool the economy. The same hot read can't be said about the stuff that goes into making a house or apartment a home, like dishwashers, refrigerators, rugs, furniture and dishes.

Consumer prices for household furnishings and operations fell 1.3% from a year ago in the latest consumer-price index for May.

U.S. Economy This Week's Inflation Data Could Have Serious Implications for Stocks

Thursday's inflation report is expected to be the main event for U.S. markets during a busy week that also includes the start of the second-quarter corporate earnings reporting season, a handful of Treasury debt auctions, and potential developments in the presidential election race.

Like all marquee economic releases, the June consumer price index numbers could have serious ramifications for markets, but investors will be paying especially close attention this month, as the timing of the Federal Reserve's first interest-rate cut could hang in the balance.

Financial Regulation Betting on Unknown Future Events May be the Next Big Thing in Hedging Your Investments

There's no denying that the latest reading of the consumer-price index or a change in the fed-funds target rate can move markets. However, unless you have insider access to economic data or the mind of Jerome Powell, it may be hard to position your investments so you're prepared for whatever the outcome is.

Now, retail traders are gaining easier access to a burgeoning financial instrument that lets them hedge positions against future events - whether that's unemployment numbers, a Fed announcement or even the weather. However, the speculative nature of these instruments means that regulators are keeping a close eye on them.

Forward Guidance Tuesday (all times ET)

6 a.m.: NFIB Index of Small Business Optimism (US)

9 a.m.: Johnson Redbook Retail Sales Index (US)

10 a.m.: Annual House committee hearing on 'The State of the International Financial System' (US)

10 a.m.: Federal Reserve Board Chair Jerome Powell presents Monetary Policy Report to U.S. Senate Banking Committee (US)

Wednesday

7 a.m.: MBA Weekly Mortgage Applications Survey (US)

10 a.m.: Federal Reserve Board Chair Jerome Powell presents Monetary Policy Report to U.S. House Financial Services Committee (US)

10 a.m.: Monthly Wholesale Trade (US)

10 a.m.: Online Help Wanted Index (US)

1:30 p.m.: FRB Chicago President Austan Goolsbee and Federal Reserve Governor Michelle Bowman speak at FedListens event (US)

Research Dollar Could Fall on Prospect of Rate Cuts

The dollar could fall if Federal Reserve Chair Jerome Powell signals interest rate cuts during his two-day semi-annual testimony starting Tuesday and if U.S. inflation data on Thursday show price pressures easing, MUFG Bank says. "We are expecting Chair Powell to signal that rate cuts could come as soon as in September if inflation continues to ease in the coming months," MUFG analyst Lee Hardman says in a note. Another softer core inflation print for June would keep the Fed on track to start cutting rates, he says. In these circumstances, the dollar could decline in the week ahead unless there is a significant upside U.S. inflation surprise, he says. - Renae Dyer

Basis Points Politics have subsumed the steel industry: Presidential contenders Joe Biden and Donald Trump can't agree on much. But when it comes to steel, they want it made in the U.S. by American-owned companies. It's Americans who will pay the price . - Barron's Total consumer credit in the U.S. rose $11.3 billion in May [https://www.marketwatch.com/story/u-s-consumer-credit-picks-up-in-may-31fed4c3#::text=The%20numbers%3A%20Total%20consumer%20credit, a%20Wall%20Street%20Journal%20survey.], up from a $6.5 billion gain in the prior month, the Federal Reserve said Monday. Economists had been expecting a $8 billion gain, according to a Wall Street Journal survey. The rise in May translates into a 2.7% annual rate, stronger than the 1.5% rise in the prior month. - MarketWatch The U.S.'s hottest job market in 2023 was Utah's tech sector , nicknamed Silicon Slopes for its proximity to the Wasatch Mountain Range. Heavily concentrated in the state's north region, startup and established tech companies run about 80 miles from Ogden to Provo, with Salt Lake City in the middle. - Jessica Flint Houston city officials said it could take days to restore power to millions of customers after Hurricane Beryl swept through the region, flattening homes and leaving several people dead. - Gareth Vipers Japan would love to strengthen the yen, with the currency's value at a nearly 38-year low. And it owns one of the world's biggest dollar stashes. Many analysts say Tokyo is getting ready to redirect some of those government-controlled dollars back into yen assets, a decision that could ripple through global financial markets , given the sums involved. - Peter Landers and Megumi Fujikawa When it comes to France's turbulent politics, the current impasse is probably the best investors could have hoped for. The risk of widespread tax increases, nationalizations and a prolonged standoff with Brussels seems smaller now than a few weeks ago. - Jon Sindreu Election results in France and the U.K. over the past few days provide fresh hope for renewable energy companies and nuclear operators, but they could weigh on oil and gas producers. - Barron's The Bank of England should leave its key interest rate at 5.25% until there is greater certainty that inflation will stay at the central bank's 2% target, rate-setter Jonathan Haskel said Monday. - Paul Hannon Former career diplomat Edmundo González is the opposition's presidential candidate in Venezuela's July election and what analysts say could be a last hope for democracy in a country ruled for 11 years by the strongman he is challenging, President Nicolás Maduro. - Kejal Vyas Unemployment rates are set to pick up only slightly across the world's rich countries in the short term, while real wages will continue to rise as profit growth cools, the Organization for Economic Cooperation and Development said Tuesday. - Paul Hannon About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to [e-mail][].

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

07-09-24 0715ET