Citi Adjusts Fed Forecast After Disappointing Jobs Report - What It Means for Investors
In a recent note, Citi economists have adjusted their forecast for the Federal Reserve's monetary policy following the release of the July jobs report, which showed slower-than-expected growth in employment. This adjustment includes predicting 50bp rate cuts in September and November, with additional cuts at consecutive meetings thereafter. The U.S. economy added 114,000 jobs in July, falling short of expectations and indicating a potential weakening in the labor market.
Citi's analysis suggests that the Fed may implement larger rate cuts in response to the recent data. Other major Wall Street research firms, such as Evercore ISI, are also revising their Fed forecast models, with calls for at least three rate cuts in 2024. The possibility of a 50bp cut in September is becoming more likely if upcoming data confirms a continued weakening in the labor market.
Following the release of this report, major US indices experienced a sharp drop, with both the [insert indices] down by more than 2%. This reaction indicates investor concern over the implications of the Fed's potential rate cuts on the economy and financial markets.
In summary, the disappointing jobs report has led to adjustments in Fed rate cut expectations, which could impact investor sentiment and market performance. Investors should pay attention to upcoming economic data releases to gauge the Fed's future actions and adjust their investment strategies accordingly.
