Jerome Powell’s speech on Friday will mark the highlight of the prestigious event in Wyoming’s Grand Teton mountains, which has been used by Fed chairs as a venue for making key policy announcements. He’s expected to reiterate the central bank’s resolve to keep raising rates to get inflation under control, but will probably stop short of signaling how big officials will go when they meet next month.

“With real rates still rising and prospects for 2023 rate cuts fading in the bond market, stock valuations look extremely stretched, especially if as we suspect, policy-driven economic slowing will prove an obstacle to currently optimistic 2023 earnings estimates,” Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, said in a note. “Stocks are overbought. Sit it out for now.”

Investors are also waking up to the looming acceleration of the Fed’s balance-sheet reduction. So-called quantitative tightening kicks into top gear next month, and will add to pressure on riskier assets which have benefited from ample liquidity. For Morgan Stanley’s Andrew Sheets, that’s one reason why dollar-denominated cash holdings look attractive against US stocks right now.

Strategists at Bank of America Corp. believe that the winding down of the central bank’s balance sheet could translate into a 7% hit to the S&P 500 next year, according to a note last week.

Read: JPMorgan Strategists See Last Big Fed Rate Hike in September

Meantime, bond bears are growing in confidence, taking heed of relentless messaging from Fed officials that the fight against inflation is nowhere near done. An aggregate gauge of net-short non-commercial positions across all Treasury maturities shows bearish bets have grown to the most since 2018, according to the latest data from the Commodity Futures Trading Commission.

What to watch this week:

• US new home sales, S&P Global PMIs, Tuesday
• Minneapolis Fed President Neel Kashkari speaks at a Q&A session, Tuesday
• US durable goods, MBA mortgage applications, pending home sales, Wednesday
• US GDP, initial jobless claims, Thursday
• Kansas City Fed hosts its annual economic policy symposium in Jackson Hole, Wyoming, Thursday
• ECB’s July minutes, Thursday
• Fed Chair Powell speaks at Jackson Hole, Friday
• US personal income, PCE deflator, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 1.6% as of 10:42 a.m. New York time
• The Nasdaq 100 fell 1.9%
• The Dow Jones Industrial Average fell 1.4%
• The Stoxx Europe 600 fell 1%
• The MSCI World index fell 1.5%

Currencies

• The Bloomberg Dollar Spot Index rose 0.4%
• The euro fell 0.6% to $0.9972
• The British pound fell 0.4% to $1.1786
• The Japanese yen fell 0.2% to 137.24 per dollar

Bonds

• The yield on 10-year Treasuries advanced three basis points to 3.00%
• Germany’s 10-year yield advanced four basis points to 1.27%
• Britain’s 10-year yield advanced eight basis points to 2.49%

Commodities

• West Texas Intermediate crude fell 3.7% to $87.40 a barrel
• Gold futures fell 0.6% to $1,752.80 an ounce