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Powell’s Jackson Hole speech underscored a shift in the Fed’s collective stance, framing risks as balanced between inflation and employment rather than dominated by inflation alone. While tariffs add uncertainty to the inflation outlook, the Fed views the shock as largely one-off, with long-term expectations continuing to ease. The labor market shows softening supply and demand without a rise in unemployment, though downside risks are mounting. Structural inflation pressures from trade and immigration constraints are beyond policy control, but cyclical weakness warrants a preventive easing approach. The Fed has effectively paved the way for a Sep rate cut, signaling a shift away from the symmetric inflation target and natural rate framework, enabling policy to ease as inflation moderates without waiting for a labor market deterioration. Markets now anticipate a quarterly pace of 25bp cuts, with flexibility to accelerate if labor conditions weaken. USTs rallied on the speech, with 10Y yields falling 7bp to 4.25%, down 6bp on the week within a 4.35%-4.24% range, while 2Y dropped 7bp to 3.71%, down 4bp on the week after trading 3.80%-3.67%. Focus turns to July new home sales, expected to ease slightly to 626k from 627k.