Market Data 
A look at the day ahead in U.S. and global markets from Mike Dolan
Wall St stocks start the week surfing new records into another earnings season and Federal Reserve testimony, while surprise French election results saw the country’s left-wing thwart Marine Le Pen’s far right and leave a hung parliament there.
U.S. Treasuries were relaxed early on and the dollar on the back foot after Friday’s June employment report showed a cooling labor market and underlined hopes for two Fed rate cuts this year.
Although it’s hard to see what more he will say beyond last week’s appearance in Portugal, Fed chair Jerome Powell faces a grilling in Congress on Tuesday and Wednesday following his semi-annual testimonies to the House and Senate.
But stock market attention will likely drift to second-quarter corporate earnings updates – which kick off with the big U.S. banks on Friday.
But much like the buzz about Britain’s election result on Friday, the attention in Europe was all on politics first thing and the unexpected outcome to Sunday’s second-round of the French assembly elections.
Not only did the far right not gain a majority, but tactical voting pushed them into third place behind the left-wing alliance and President Emmanuel Macron’s centrist grouping.
Markets breathed a sigh of relief that the lack of a dominant force in parliament likely leaves policy gridlock for now – with fiscal worries surrounding both right and left tax and spend agendas easing somewhat.
While the parliamentary hotch potch raises questions about getting next year’s budget agreed amid European Union pressure to rein in the deficit closer to EU budget rules, the constellation in the assembly was not much different to what it was before the snap election was called last month.
French stocks gained almost 1%, French government debt yields eased more than 5 basis points and the risk premium over German equivalents edged 2bp lower to 66bp too.
The euro retained Friday’s gains to three week highs against a softer dollar.
Sterling also basked in the glow of a new government, with the pound hitting its best level since June 12 as the Labour Party set out its stall following a landslide poll win on Thursday that gives it more than a 170 seat majority in parliament.
Britain’s finance minister Rachel Reeves set out plans on Monday to unblock infrastructure projects and private investment under a new “national mission” to drive economic growth.
Speaking to business leaders, she said mandatory house-building targets would be restored.
New foreign minister David Lammy also talked about a wanting to “reset” of Britain’s relationship with the EU.
In U.S. politics, the picture is more confusing. Even though pressure on President Joe Biden to step aside in the White House still circulates within the Democratic party, most Democrats still back him and opinion polls show he’s still doing ok in key marginal states.
U.S. stock futures were steady ahead of the open near Friday’s new record highs, with 10-year Treasury yields hovering around 4.3%. prices fell sharply to start the week.
Elsewhere, world stocks were generally buoyant and MSCI’s all-country index also eked out a new all-time high.
China’s ailing stocks remained the exception, with mainland stock indexes falling for the fifth straight session. They lost almost 1% on Monday and are now back in the red for the year to date.
China’s central bank said on Monday it would start conducting temporary bond repurchase agreements or reverse repos to make open market operations more efficient and keep banking system liquidity ample.
Key developments that should provide more direction to U.S. markets later on Monday:
* US June employment trends, May consumer credit
* Bank of England Monetary Policy Committee member Jonathan Haskel speaks
* US Treasury auctions 3-, 6-month bills
(By Mike Dolan; Editing by Toby Chopra [email protected])
