Nikkei 225

The dollar was broadly weaker after dovish comments from Fed Governor Lael Brainard amid reverberations from reports of Donald Trump Jr.’s contact with a Russian lawyer; European equities rebounded with oil while S&P futures were 0.2% higher at 2,428; Treasury yields are 1-2bps lower across the curve with the 10y at 2.346% ahead of Yellen’s much anticipated testimony this morning (House today, Senate tomorrow) for further clues on the trajectory of monetary policy while the Bank of Canada is expected to hike rates later.

U.S. index futures point slightly lower open. Asian shares rose while stocks in Europe fell as energy producers got caught in a downdraft in oil prices and reversed an earlier gain after Goldman unexpectedly warned that WTI could slide below $40 absent "show and awe" from OPEC. The dollar rose, hitting a four-month high against the yen and bonds and top emerging market currencies were back under pressure on Tuesday, following last week’s hawkish rhetoric from central bankers.

In a quiet overnight session, S&P 500 futures are fractionally in the green (2,426, +0.2%) with European and Asian stocks as oil drops second day after an initial ramp higher amid speculation that LIbya and Nigeria may be asked to cap their production. Nasdaq 100 Index are again higher, following the biggest daily advance in more than a week, up 0.4% as of 6:20 a.m. in New York.

S&P futures are little changed following yesterday's rout even as Asian and European markets continued selling; the pound slid on poor factory data, the yen tumbled after the BOJ intervened to stabilize the JGB bond market, precious metals flash crashed early in the session, while the selloff in oil accelerated despite yesterday's massive inventory draw, although at least yesterday's sharp bond tantrum has stabilized.

During this morning's bond rout when a poor French auction sparked a high-volume selloff in German Bunds which also hit Japanese JGBs before slamming US TSYs, Goldman said that "with 10Y JGBs closing at 0.095 and getting hit at 10bp intraday, focus will be on how the BOJ will react tomorrow [i.e. now]. Opinions seem pretty split with some expecting an increase in purchase size in the 5-10 bucket, while others feel that the BOJ will let the 10Y run loose given the current sell off is more fundamental than event driven.