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All Eyes on the Fed as Powell Reiterates Rate Path

Geopolitical risk took a backseat this week as market participants focused on the future of domestic monetary policy.  The release of the Fed's meeting minutes from their July 31-August 1 meeting as well as the kickoff of the annual Fed research symposium in Jackson Hole gave the market plenty to digest.  Chairman Powell's Friday morning remarks dovetailed with the market's expectation for additional rate hikes, as the Chairman stated that  ``if the strong growth in income and jobs continues, further gradual increases in the target range for the federal funds rate will likely be appropriate.'' 

Shorter-dated bond yields were unchanged on the week, while longer-dated issues declined, flattening the yield curve further.  The difference between the two- and ten-year Treasury note yields is now only 20 bps.  The week's economic indicators were mostly positive, although further weakness was evident in the housing sector as both new and existing home sales declined in July.

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