Jackson Hole Speech Delivers

Powell’s Jackson Hole speech was this week’s only big ticket in terms of market movement potential and it definitely delivered. We haven’t heard from Powell since 2 days before infamous August 1st jobs report. His tone logically pivoted to place incrementally more focus on the Fed’s full employment mandate while repeating that the base case is for tariff-driven inflation to be–well–transitory. Combine that with his reminder that policy rates are still in restrictive territory and the takeaway was a subtle but obvious openness to consider a September cut. Traders were surprisingly surprised by this, thus making for a decent little rally in bonds. Gains arrived swiftly and hung out uneventfully through the close.

Market Movement Recap

09:56 AM Flat overnight and slightly stronger in early trading.  MBS up 1 tick (.03) and 10yr down 1.8bps at 4.309

10:16 AM Sharp rally after Powell speech.  MBS up 10 ticks (.31) and 10yr down 7.2bps at 4.254

01:25 PM Holding fairly close to strongest levels. MBS up nearly 3/8ths and 10yr down 7bps at 4.258

03:42 PM little-changed at strongest levels.  MBS still up 3/8ths and 10yr down 6.7bps at 4.260