Bond Market Awaits Powell’s Speech for Hints on | Bonds & Fixed Income

The bond market has been in a holding sample this month, trying for new catalysts for clues on assessing the outlook for . On one aspect of the ledger: ongoing considerations that tariffs will raise and persuade the Fed to keep coverage regular. But with indicators of slowing financial growth, the case for trimming charges is building.

Enter Federal Reserve Chairman Powell, who’s scheduled to present a speech tomorrow (Friday, Aug. 22) that can obtain extensive consideration in financial markets.

“I don’t think Powell can push the narrative toward cutting because that leaves him no option but to cut,” stated Mike Sanders, head of fixed income at investment management firm Madison Investments. “He has to signal, ‘We’re still data-dependent and we’ll see what the data tells us’” with the intention to go away the central bank’s choices open.

Lauren Goodwin, economist and chief market strategist at New York Life Investments, additionally sees Powell as betwixt and between in phrases of clear coverage decisions.

“Inflation has made little progress toward the Fed’s 2% target since last year’s conference,” she writes. “The labor market is better balanced, but increasingly shaped by a mix of cyclical softening, structural trends and policy-driven shocks.”

The bond market has been trading in a tight vary over the previous two weeks, holding on to extensively held positive aspects this yr, based mostly on a set of ETFs. The investment-grade benchmark – Vanguard Total Bond Market ETF (NASDAQ:) – is up 4.6% yr thus far via Wednesday’s close (Aug. 20).

Bonds typically are posting positive aspects up to now this yr, with all the main parts firmly in optimistic terrain. Intermediate-term corporates () are the highest performer with a 6.4% rally in 2025.

Searching for direction for the remainder of the yr, the bond market can be keenly targeted on Powell’s feedback. But it’s not apparent that deeper readability is imminent, and it’s potential that buyers are nonetheless left struggling to search out a new catalyst within the wake of Powell’s discuss.

Meantime, Fed funds futures are pricing in a charge cut at subsequent month’s coverage assembly. The present implied estimate is a roughly 79% probability for easing on the Sep. 17 FOMC assembly.

The Fed has “multiple risks that they have to contend with,” stated James Clouse, who was the Fed’s division of financial affairs till May.

“Exactly how they conduct policy in this environment is just very difficult and involves weighing the cost of inflation over the longer run versus the near-term costs of an economy that is weakening.”

The chance that the outlook is simply as cloudy after Powell’s speech as it’s now looks as if a affordable wager.