It's been a busy June for Janet Yellen. Central bank watchers will hear from the Fed chief for the fourth time this month when she presents her semiannual testimony on monetary policy before Congress today and tomorrow. The FOMC left rates unchanged when officials met last week, but Yellen's comments will be closely watched to see whether a July rate hike still remains an option, as well as potential financial stability risks of a Brexit.

Economy

Germany's Constitutional Court has rejected a legal challenge to the ECB's Outright Monetary Transaction program, a never-used crisis tool that allowed the central bank to buy debt of financially strained countries. The case was brought by 35K German politicians and academics who argued that the so-called OMT scheme violates European law, ever since the ECB announced the program in 2012 and pledged to do "whatever it takes" to prevent the eurozone from imploding.

Sterling is heading higher after recording its largest daily gain in eight years on the back of fresh opinion polls that showed Britain would vote to stay in the EU. But other surveys put the Leave camp in the lead as George Soros, the billionaire who earned fame by betting against the pound in 1992, warned a Brexit would trigger a bigger and more disruptive sterling devaluation than the fall on Black Wednesday. The pound +0.5% to $1.4760.

German investor confidence surged in June, rising to to 19.2 points from 6.4 last month, reflecting the resilience of Europe's largest economy despite anxiety over the U.K.'s vote on EU membership. "General economic conditions remain challenging," cautioned ZEW President Achim Wambach. "Apart from the weak global economic dynamics, it is mainly the EU referendum in Great Britain which causes uncertainty."

Minutes of the BOJ's April meeting showed policymakers continue to believe overseas markets pose downside risks to the nation's economy and prices. The central bank kept policy unchanged at a subsequent meeting last week, but it will face a more critical gathering in late July when it again reviews its growth and inflation projections.

Stocks

Senators couldn't muster enough bipartisan support to pass a series of gun control measures late Monday, including bills on background checks and preventing suspected terrorists from purchasing weapons. The gridlock underscores the difficulty of passing gun legislation in Washington, even as pressure mounts on lawmakers following last week's deadly mass shooting at a night club in Orlando. Related tickers: SWHC, RGR, VSTO

Tencent has reached an agreement to buy Supercell Oy, the maker of the popular "Clash of Clans," in a deal that could turn the Chinese internet major into a global video game powerhouse. According to WSJ sources, details of the deal will be announced later today. It was previously reported that Tencent (OTCPK:TCEHY) had been in talks with SoftBank (OTCPK:SFTBY) to buy the company's majority stake in Supercell at a $9B valuation.

At the company's annual general meeting, Facebook (NASDAQ:FB) investors gave the green light to a new class of so-called "C" shares, which will be publicly listed under a new symbol. The measure is effectively a three for one stock split, which will allow CEO Mark Zuckerberg to retain control of the social network, while selling off shares to pay for his philanthropy. Shareholders also approved the continued tenure of all eight board members, including investor Peter Thiel.

Switching its strategies in China, Wal-Mart (NYSE:WMT) is forging a partnership with one of the country's largest e-commerce players rather than trying to crack the fast-growing market on its own. The deal will see the U.S. retail giant receive 144.952M new shares in JD.com (worth about $1.5B) as payment, while the latter will land control of the Yihaodian online marketplace. Sam's Club China will also open a flagship store on JD.com. JD +2.1% premarket.

Bids for Sports Authority store leases are due Thursday, and outlets with leases that go unsold are in danger of going dark (the company sold its inventory to a trio of liquidators in May). The latest news is that the U.K.'s Sports Direct (OTCPK:SDISY) is in talks with Modell's about a potential joint bid to buy as many as 200 Sports Authority stores out of the retailer's bankruptcy.

Boston Retirement System has filed the first bondholders proposed class action against Volkswagen (OTCPK:VLKAY) claiming that "false and misleading statements" led to the securities' decline after its "emissions scandal went public." German prosecutors have also launched a probe against former CEO Martin Winterkorn and another senior executive for allegedly not informing investors quickly enough about potential losses.

Hurt by compensation costs and a slide in vehicle sales, Mitsubishi Motors (OTC:MMTOY) expects to post a net loss this financial year over its mileage cheating scandal, Kyodo reports. The automaker has blamed the wrongdoing on pressure to deliver competitive fuel economy readings and poor supervision of testing processes.

Fiat Chrysler is conducting a "thorough investigation" into the accident that killed Star Trek actor Anton Yelchin over the weekend, when his SUV unexpectedly rolled down an incline and pinned him against a brick pillar. Fiat Chrysler (NYSE:FCAU) in April recalled more than 1.1M cars and SUVs worldwide because vehicles may roll away after drivers exit, an issue linked to 41 injuries, 212 crashes and 308 reports of property damage.

One oil worker has been killed and two others were severely burned after an explosion at a well owned by an Exxon (NYSE:XOM) subsidiary in North Dakota. A flash fire was said to be caused by an accidental release of gas, but the U.S. Department of Labor's Occupational Safety and Health Administration has launched an investigation, which could take up to six months.

Scoffing at Philippe Dauman's accusation that he's under the influence of his daughter, Sumner Redstone has asked a Massachusetts judge to toss the Viacom chief executive's (VIA, VIAB) lawsuit over control of his media empire. In court papers, Redstone called Dauman's claim "offensive and untrue" and urged the judge to move litigation over his decisions to California from Massachusetts.

Brazilian telecom Oi has filed for the country's largest ever bankruptcy protection after the company ran out of time to restructure 65B reais ($19B) of debt amid a harsh recession. The filing is likely to have major repercussions in Brazil, since several major state-owned banks are among Oi's (NYSE:OIBR) top creditors.

New York Governor Andrew Cuomo has another important bill in his hands, which could ban short-term NYC rentals on Airbnb (Private:AIRB). The measure outlaws online apartment listings that last under 30 days and carries fines of up to $7,500 for multiple violations. The state already prohibited rentals that lasted less than a month if residents weren't present, but posting listings for such rentals were not explicitly barred.

According to Reuters, drug distributor McKesson (NYSE:MCK) has held talks about merging its information technology unit - Technology Solutions - with Change Healthcare. A combination would create one of the biggest players in the healthcare information technology sector, potentially worth more than $10B, including debt.

Bill Ackman and Herbalife are at it again as investors await the outcome of an FTC probe into the operations of the nutritional supplements maker. Pershing Square has released the first in a series of videos this week that illustrates what Ackman calls the company's predatory recruiting practices. Herbalife (NYSE:HLF) already has a slew of videos against the fund manager on its website - www.therealbillackman.com - where it calls his legacy "riddled with losses."

Today's Markets

In Asia, Japan +1.3% to 16169. Hong Kong +0.8% to 20668. China -0.4% to 2879. India -0.2% to 26813.
In Europe, at midday, London +0.1%. Paris +0.7%. Frankfurt +0.6%.
Futures at 6:20, Dow +0.4%. S&P +0.5%. Nasdaq +0.5%. Crude -0.7% to $49.61. Gold -0.7% to $1282.70.
Ten-year Treasury Yield +1 bps to 1.68%

Today's Economic Calendar

8:55 Redbook Chain Store Sales
10:00 Yellen delivers semi-annual monetary policy testimony
1:00 PM Results of $34B, 5-Year Note Auction