Jerome Powell signaled that the Federal Reserve will resume cutting interest rates next month, boosting the US bond market. Despite the positive response, doubts linger on how much rates will drop. Market remains wary of mixed data and cross-currents facing the Fed, including inflation and labor market concerns. Traders predict a 80% chance of a rate cut in September. President Trump’s influence on the central bank adds uncertainty to the market. Bond investors brace for inflation risks and potential selloffs ahead of the Fed’s next meeting. Market movements suggest a cautious approach to rate cuts amid concerns of rising inflation. Powell’s pivot to easing monetary policy has fueled a curve steepening trade, with potential rate cuts expected. Economic data and Fed calendar events will influence market sentiment and bond yields leading up to the September meeting.

Read more at Yahoo Finance: Bond Market’s Big Powell Rally Needs Supportive Data to March On