Overview

• Speaking at Jackson Hole, Jerome Powell said a rapid deterioration in the labor market could justify lowering interest rates.
• U.S. equities rallied following the remarks, with the Dow Jones closing at a record 45,631.74 and the S&P 500 and Nasdaq up 1.52% and 1.88%.
• Treasury yields fell sharply as expectations shifted, with the two-year near 3.69% and the ten-year around 4.25%, and the dollar weakened.
• CME FedWatch showed increased odds of a September cut, though officials signaled that decisions will hinge on upcoming inflation and jobs data.
• Optimism extended overseas, with Paris’s CAC 40 finishing up 0.40% after the speech.