After Jackson Hole: What Powell’s Rate‑Cut Signal Means for Bonds, Yields and Investor Playbooks
Federal Reserve Chair Jerome Powell used Jackson Hole to underscore a data‑contingent shift: if labor‑market risks continue to build and tariff‑related price effects prove to be a one‑time level shift rather than persistent inflation, policy easing is on the table. His comments that “the shifting balance of risks may warrant adjusting our policy stance” and that policy is “not on a preset course” re‑anchored the front end of the Treasury curve and boosted risk appetite, according to BBC and NPR reporting. Equities rallied into the close of his speech, with volatility easing and cyclicals firming alongside mega‑cap tech—consistent with a lower expected discount‑rate path. Market pricing corroborates the pivot. The effective fed funds rate is 4.33% for July (FRED), while the 2‑year Treasury is 3.68% and the 10‑year is 4.26% as of Aug 22 (U.S. Treasury). The 10s–2s spread has re‑steepened to roughly +58 bps and has held positive through mid‑to‑late August, per FMP’s 10y–2y spread series and Treasury yields. Over the last 30 trading days, major benchmarks advanced—SPY +3.3%, QQQ +2.8%, Dow +2.6%, and small‑caps (IWM) +5.2%—while TLT rose ~1.7% and GLD gained ~0.8% (Yahoo Finance). The VIX fell from ~17 to ~14, signaling easier financial conditions (Yahoo Finance). This piece examines the curve mechanics behind Powell’s signal, policy implications, cross‑asset impacts, and portfolio positioning for a data‑dependent glide path.