Yellen’s testimony could give details on Fed lift-off timing

Today's main US event is Fed Chair Yellen's testimony to the House Financial Services Committee where her text and Q&A session will be closely scrutinised for the timing of the first rate hike. Her views of global risks should be somewhat more sanguine following Greece's deal with its creditors and the rebound in Chinese asset prices over the past week.

Fed Chair Yellen will deliver her testimony to Congress, which could provide with new clues as to when the first lift-off in US rates might be seen. A September hike remains the baseline, even though the chances seem to be diminishing after the latest US data. From the US also, industrial production, the Empire manufacturing reading and capacity utilisation are due with the Fed's Beige Book expected later in the evening.

US yields were pressured lower yesterday as June retail sales disappointed. This prompted the market to pare back Fed expectations. The first full 25 bp rate hike is not priced until February 2016. The US 2Y yield fell 4 bp to 64 bp while the 10Y yield dropped 3 bp to 2.41%.

 The US curve might be seen bear-flatten, led by higher US 2Y yields.