Fed could cut 50bp at one or more meeting on bad data: Citi
Rising recession risks have led two-year Treasury yields to plummet to their lowest levels of the year, prompting market expectations for more than the 75 basis points of rate cuts, Citi said in its note Friday.
This outlook hinges on economic data, particularly the jobs report, where Citi projected 150,000 payrolls and an increase in the unemployment rate to 4.2%. Unemployment, in fact, rose to 4.3%, according to the data reported today, with non-farm payrolls coming in at 114,000. Citi notes that policy rates are currently restrictive, slowing the economy and increasing the unemployment rate. With the labor market already as loose as it was pre-pandemic, the FOMC is unlikely to allow the unemployment rate to rise much further.
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