Major brokerages, including Barclays, BNP Paribas and Deutsche Bank, now expect a 25-basis-point U.S. Federal Reserve rate cut in September following Chair Jerome Powell's shift in tone at Jackson Hole toward rising risks in the labor market.

Jay Powell set the stage for a reduction in borrowing costs but jobs and inflation reports could get in the way

Treasurys sold off slightly in Monday morning trading, but held on to the bulk of Friday's rally, as strategists raised questions about whether a September interest-rate cut from the Federal Reserve can actually happen.