Yen Intervention Seen as Unlikely to Cool Dollar Demand — Market Talk

1338 ET - Intervention to support the Japanese yen could end up fueling demand for the U.S. dollar. Bannockburn's Marc Chandler says that traders are buying puts as protection against a pro-yen intervention. That type of insurance would skyrocket in value if the intervention materializes. Chandler expects the profits to be used to buy dollars, doubling-down on bets that the greenback will continue to rise. The yen is at a 40-year low, at 162.64 per dollar. The greenback strengthens on robust U.S. indicators and forecasts of a hawkish Fed. The WSJ Dollar Index rises 0.1%, with the dollar gaining 0.4% against the yen and 0.1% versus the euro and the Swiss franc. (paulo.trevisani@wsj.com; @ptrevisani)

1216 ET - Treasury yields and the dollar keep rising after a batch of somewhat reassuring U.S. indicators. The Conference Board consumer confidence index ticks higher to 91.2, although below WSJ consensus of 94.2. May job openings were unchanged at 7.6 million. Fed funds futures price in 83% odds of at least one hike this year, according to CME's FedWatch tool. Employment data due the next couple of days are expected to cool down while staying at healthy levels, in WSJ surveys. The 10-year yield is at 4.402%, on pace for a third consecutive quarterly rise. The WSJ Dollar Index rises slightly, on track for its fourth consecutive quarterly gain. (paulo.trevisani@wsj.com; @ptrevisani)

1130 ET - Cleveland Fed President Beth Hammack says if higher inflation trends continue, the Fed may need to raise interest rates to restore inflation to target, citing robust consumer spending and short-term inflationary pressures from the AI data center buildup. Outside of higher energy prices, Hammack says during a CNBC interview, "When I look at that core inflation, that's been very elevated." Additionally, Hammack adds that she wants to see if consumer spending continues to hold up. "If it does, then that says to me that policy may not be restrictive enough to help us bring inflation back down," she says.(jessica.coacci@wsj.com)

1122 ET - Japan's efforts to support the yen could have implications for U.S. government borrowing, Corpay's Karl Schamotta tells WSJ in an email. Tokyo is widely expected to intervene as the yen hits a 40-year low against the dollar. Schamotta says past interventions have seen a relatively small amount of sales from Japan's large holdings of Treasurys, since a significant selloff would cause U.S. yields to spike, further strengthening the greenback. However, Japanese FX policies could seek to keep more capital at home, hampering dollar-bound flows that for years have allowed Washington to finance its own debt. The U.S. "has grown accustomed to Japanese demand for its debt," Schamotta says. "It should not assume that demand is unconditional." (paulo.trevisani@wsj.com; @ptrevisani)

1026 ET - The median U.S. luxury home sale price rose 4.7% year over year to $1.37 million during the three months ending May 31, Redfin says. That's more than triple the 1.5% gain in non-luxury sale prices. Luxury prices are increasing largely because demand for luxury homes is on the rise. Pending sales of luxury homes rose 5.2%, compared with a 3.6% gain in non-luxury pending sales, which is deceleration from the month before. High-end homebuyers are less sensitive to affordability pressures and financial instability. Overall homebuying demand has been fairly slow because mortgage rates and home prices remain high. Ultra-wealthy Americans have the freedom to make big purchases even in uncertain times. (chris.wack@wsj.com)

1019 ET - Most-active lean hog futures are up 1.7%, potentially establishing upward momentum after last week's Hogs and Pigs report showed a shrinking hog supply in the second half of 2026. Livestock traders are keeping an eye on the flow of news surrounding the future of the USMCA, which is important to hogs as Mexico and Canada are large buyers of U.S. pork exports. If President Trump does announce that the deal will not be extended, then that leaves it in "infinite limbo," says StoneX in a note. "We may be in rounds of negotiation for the remainder of the Trump administration, if not longer," says the firm. Live cattle are down 0.3%. (kirk.maltais@wsj.com)

0942 ET - Recession talk in Canada, sparked by a 0.1% annualized decline in 1Q, was for naught based on April GDP data, says Douglas Porter, chief economist at BMO Capital Markets. GDP by industry rose 0.5% in April, and 1.1% on a 12-month basis, which marks the fastest pace of year-over-year growth in seven months. Porter says GDP is on track for 2%-plus annualized growth in 2Q, given early estimate for a 0.1% jump in May. The May estimate "will serve as a reminder that Canada is still growing slower than potential," Porter says. "Nevertheless, it's also clear that the small two-quarter dip in output was a false alarm on the recession watch." (paul.vieira@wsj.com; @paulvieira)

0940 ET - Canada's GDP data for April should take some air out of the recent recession talk in the country, says Marc Ercolao, economist at TD Bank. GDP by industry rose 0.5% in April from the prior month, and that leaves quarterly GDP tracking above 2% annualized, he says. GDP growth in April was largely fueled by the commodities sector, although 14 of 20 sectors tracked by Statistics Canada recorded growth in the month. Ercolao says the economy is grinding through a soft patch. For the Bank of Canada, he adds, "this argues for patience rather than a pivot." He says the data will take pressure off BOC to cut rates to deal with the economic slump. (paul.vieira@wsj.com; @paulvieira)

0926 ET - Quarterly growth in Canada likely resumed after data shows a sizable jump in GDP by industry in April, says Michael Davenport from Oxford Economics. GDP by industry rose 0.5% in April from the prior month, bringing relief to policymakers after two straight quarters of contraction. Davenport, however, says Canada's economy faces stiff headwinds, which includes US trade policy, stagnant population growth and the lingering effects of the global energy shock. Davenport, an economist, says economic output should pick up steam in 2H but warns Canada's economy could find itself on a permanently lower path should--as expected--the Trump administration opt not to renew USMCA. That would subject the trade pact to annual reviews, he says, extending the level of uncertainty hovering over Canada. (paul.vieira@wsj.com; @paulvieira)

0923 ET - Oil futures move higher with the U.S. and Iran expected to resume talks in Qatar following weekend military exchanges. "Although meetings are scheduled to take place as early as today, Iran is less clear as to the timing and scale of such talks," Ritterbusch & Associates says in a note. Significant movement of ships through the Strait of Hormuz could resume following a brief disruption, but "we feel that the resumption of military activities so soon after the Memorandum of Understanding will be demanding a much larger risk premium than currently exists." WTI is up 0.7% at $71.24 a barrel, and most active Brent gains 0.8% to $74.49. (anthony.harrup@wsj.com)

0901 ET - Canada GDP is on track for a sizable 2.5% annualized gain in 2Q following better-than-expected economic data for April, says economist Andrew Grantham from CIBC Capital Markets. GDP by industry in April rose 0.5% from the prior month, and Statistics Canada's early estimate is for a 0.1% month-over-month jump in May. Grantham says a 2.5% annualized jump in 2Q would surpass by a wide margin the Bank of Canada's forecast for a 1.5% rise. Still, "it wouldn't quite make up for the undershoot in 1Q from an output gap point of view," Grantham says, in reference to the 0.1% annualized drop in 1Q. Grantham says the firm is sticking to its call for no move in BOC's policy rate this year. (paul.vieira@wsj.com; @paulvieira)

0853 ET - Treasury yields rise, on path for a quarterly increase. An agreement to fully restore shipping through the Strait of Hormuz remains elusive and oil prices edge higher. Fed funds futures price at least one Fed hike this year, according to CME. U.S. labor data starts to trickle in, with the JOLTS report due at 10 a.m. ADP's private-sector jobs report comes tomorrow, followed by June's nonfarm payrolls Thursday. Both are expected to show slowing job creation, in WSJ surveys. President Trump signals legal pressure on Fed Governor Cook will continue. The WSJ Dollar Index rises 0.2%. The 10-year is at 4.390%, up from 4.375% yesterday. The two-year rises to 4.121% from 4.108%. (paulo.trevisani@wsj.com; @ptrevisani)