U.S. bond traders are entering a pivotal week as Federal Reserve Chair Jerome Powell prepares to speak at the central bank’s annual Jackson Hole symposium in Wyoming. Markets have largely priced in a quarter-point rate cut in September, with at least one additional reduction expected by year-end, according to Bloomberg.

Investors are betting that a softening labor market will allow a more dovish tone, although recent inflation data has complicated the outlook. Treasury yields have fallen across most maturities this month, led by the two-year rate, which has dropped to around 3.75%, steepening the yield curve and reflecting expectations for monetary easing.

Powell’s Jackson Hole appearances have historically moved markets, signaling policy direction. Bloomberg reports that traders are now positioning for a potential half-point cut next month despite elevated producer prices, with market attention focused on upcoming economic reports that will determine the Fed’s next steps. The combination of persistent inflation, weak employment data, and broader fiscal pressures will be decisive for monetary policy in the months ahead.