Fed Chair Kevin Warsh will deliver his first congressional testimony since taking office, appearing before the House Financial Services Committee on July 14 at 10 AM and the Senate Banking Committee on July 15 at 10 AM for semi-annual monetary policy reports. Both testimonies will occur 90 minutes after the release of June Consumer Price Index (CPI) and Producer Price Index (PPI) data at 8:30 AM on their respective days. The timing is significant as the Federal Open Market Committee (FOMC) enters its blackout period on July 18, making this week the final opportunity for Fed officials to signal whether rate increases will be discussed at the July 28-29 FOMC meeting. Minutes from the June FOMC revealed minority support for rate hikes at that time.
Warsh Testifies to Congress July 14-15 Following Inflation Data Releases
Warsh's House Financial Services Committee appearance is scheduled for July 14 at 10 AM, with his Senate Banking Committee testimony set for July 15 at 10 AM. The June CPI will be released July 14 at 8:30 AM, while the June PPI is scheduled for July 15 at 8:30 AM. Warsh will review both inflation reports before facing lawmakers. The Fed's blackout period begins July 18 (Saturday), after which senior Fed officials cannot make public comments ahead of the July 28-29 FOMC meeting.
June CPI Expected to Show 3.8% Headline Inflation
Market consensus forecasts June headline CPI at 3.8% year-over-year, down from 4.2% in May, driven by falling energy prices. The month-over-month change is expected to show a slight decline. Core CPI is projected to hold steady at 2.9% year-over-year. PPI data will provide inputs for calculating the Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation gauge. Additional economic data releases this week include June retail sales (July 16), NFIB June small business optimism index (July 14), New York July manufacturing index (July 15), NAHB July housing market index and June pending home sales (July 16), June import/export prices and industrial production and housing starts (July 16), and University of Michigan July consumer sentiment preliminary reading (July 17). The Fed's Beige Book economic assessment will be published July 15.
Fed Officials Speak Ahead of July 18 Blackout Period
Christopher Waller, a Fed Governor who turned hawkish after Warsh's appointment, will speak on the economic outlook at a New York Association for Business Economics (NYABE) event on July 13. Fed Vice Chair Philip Jefferson is scheduled to appear July 16, while New York Fed President John Williams will speak July 15. Other scheduled speakers include Vice Chair for Supervision Michelle Bowman (July 13-14), Governors Michael Barr and Lisa Cook, and Chicago Fed President Austan Goolsbee (July 14), St. Louis Fed President Alberto Musalem (July 15), and Dallas Fed President Lorie Logan and Kansas City Fed President Jeffrey Schmid (July 16). CME FedWatch shows fed funds futures pricing in approximately 37 basis points of rate increases by year-end as of July 10, up 7bp from the prior week.
Treasury Yields Rise on Iran-Hormuz Tensions
The 10-year Treasury yield closed at 4.5630% on July 10, up 7.60 basis points for the week. The 2-year yield rose 6.90bp to 4.2100%, while the 30-year yield increased 7.30bp to 5.0620%. The 10-year/2-year spread widened 0.70bp to 35.30bp. Iran's Islamic Revolutionary Guard Corps (IRGC) declared a blockade of the Hormuz Strait on the morning of July 12 (Korean time), citing illegal shipping routes. U.S. forces struck approximately 140 Iranian military targets in response to IRGC attacks on commercial vessels. West Texas Intermediate (WTI) crude oil rose 3.96% for the week, ending a four-week decline. Japan's government announced plans to promote increased domestic investment by public pension funds including GPIF, raising concerns about potential reduction in Japanese demand for U.S. Treasuries.
FAQ
When does Fed Chair Kevin Warsh testify to Congress?
Warsh appears before the House Financial Services Committee on July 14 at 10 AM and the Senate Banking Committee on July 15 at 10 AM for semi-annual monetary policy reports.
What is the market consensus for June CPI?
Consensus forecasts June headline CPI at 3.8% year-over-year (down from 4.2% in May) and core CPI at 2.9% year-over-year (unchanged from May). Both reports are released at 8:30 AM on July 14 (CPI) and July 15 (PPI).
When does the Fed blackout period begin?
The Fed blackout period starts July 18 (Saturday), after which senior officials cannot make public comments ahead of the July 28-29 FOMC meeting.
