Extreme optimism throughout 2023 gave way to growing skepticism in August as investors contemplated the trajectory for monetary policy. Volatility resurfaced and most asset classes ended the month lower as the higher-for-longer interest rate narrative took hold following data that showed ongoing resilience in the US economy. Meanwhile, Chair Powell struck a balanced tone in his Jackson Hole appearance. He repeated that officials are “prepared to raise rates further if appropriate” but stressed that the central bank would “proceed carefully” and would be guided by the economic data. On the latter, the risk-off mood subsided towards month-end after a series of softer US economic data revived wagers that the Federal Reserve is done raising rates, which buttressed both stock and bond markets towards month-end and tempered some of their earlier losses.