Bond Yields Edge Lower as Fedspeak Takes Center Stage

Wall Street traders are bracing for Federal Reserve Chair Jerome Powell’s highly anticipated speech later this week. In the meantime, markets will get a preview from two Fed officials who have recently cautioned that delaying interest rate cuts could put unnecessary pressure on the labor market.

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Treasury yields ticked lower ahead of remarks from Fed Governor Michelle Bowman, who is scheduled to speak twice on Tuesday. Fellow policymaker Christopher Waller will deliver comments on Wednesday, coinciding with the release of minutes from the Fed’s latest policy meeting.

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Stock market activity remained relatively calm as the retail earnings season got underway. Home Depot Inc. advanced after the home-improvement retailer reaffirmed its annual outlook despite reporting softer sales figures.

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Powell’s address on Friday at the central bank’s annual symposium in Jackson Hole, Wyoming, marks a critical moment for the bond market. Investors widely expect a quarter-point rate cut in September, followed by at least one more reduction before year-end. Powell has used this platform in past years to make influential policy announcements, and this year’s speech carries significant weight.

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“As markets gear up for Powell’s remarks at Jackson Hole, we believe the biggest risk for Treasuries would be if the Fed Chair pushes back against expectations for a September rate cut,” said Ian Lyngen of BMO Capital Markets. “To be clear, that’s not our base-case scenario. However, the front end of the yield curve could see a bearish correction if Powell’s tone is less dovish than the market anticipates.”

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Meanwhile, S&P Global Ratings noted that tariff revenue is helping to cushion the fiscal impact of recent tax cuts, allowing the U.S. to maintain its credit standing. The agency reaffirmed its AA+ rating for the United States a grade it has held since 2011.

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The rating decision provides a modest win for President Donald Trump, supporting his argument that tariffs are strengthening the country’s fiscal position. Tariff collections reached a new monthly record in July, with customs duties climbing to $28 billion.

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On the geopolitical front, Trump called on Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy to show “flexibility” as he ramps up efforts to end the ongoing war in Ukraine. The U.S. president also encouraged both leaders to consider holding a face-to-face summit.

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“I hope President Putin will act responsibly, and if he doesn’t, things could get tough,” Trump said in a Tuesday interview with Fox News. “I also hope President Zelenskiy does what’s necessary he needs to demonstrate some flexibility as well.”

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