Powell Goes Dovish at Jackson Hole

• Fed Chair Powell’s Jackson Hole remarks struck a slightly dovish tone, noting that “the balance of risks may be shifting” with inflation risks still tilted to the upside, but employment risks increasingly to the downside.
• The message leaves the door open to a September cut, with the onus now on incoming data, particularly the August non-farm payrolls, to prevent the FOMC from moving the policy stance.
• US bond yields fell sharply on Friday as Powell’s remarks fuelled rate cut expectations, with the 10-year down 8bps to 4.26% and the 2-year sliding 9bps to 3.70%.
• On the domestic calendar this week, focus will be on Tuesday’s RBA minutes and Wednesday’s July CPI indicator, expected to rise to 2.3% YoY.