The yield on the 10-year US Treasury note fell to 4.26% on Friday, nearly 10bps below its session highs after Federal Reserve Chairman Powell signaled that the central bank is likely to cut interest rates next meeting. The Chairman stated that the balance of risks in between inflationary pressures and a softening labor market have shifted enough to warrant an adjustment in monetary policy, paving the way for a 25bps rate cut in September and driving markets to raise bets of further policy easing in the fourth quarter. Rate futures showed a consensus of two total cuts for the year, while 40% of the market was positioned for three cuts. Still, the steepening yield curve indicated a partial heed to inflation and a disconnect between short and long-term interest rates, compounded by the hot PPI release and evidence of accelerating prices in ISM and S&P PMIs.