JPM and Citi maintain July rate cut expectations
Before the critical US non-farm employment data to be announced today at 15:30 GMT, two giant Wall Street banks, JPMorgan and Citigroup, maintain their expectations for an interest rate cut from the Fed in July.
Citi’s US chief economist Andrew Hollenhorst stated in a note published on Wednesday that they expect four interest rate cuts this year, and that the cut that will take place in July depends on the weak employment data to be announced today.
Citi economist predicts that the US economy created 140,000 non-farm jobs in May and the unemployment rate increased from 3.9 percent to 4 percent. JPMorgan expects 150,000 nonfarm jobs. In a note published in mid-May, the bank’s US chief economist Michael Feroli stated that expectations for a rate cut in July were based on weakening inflation in April, and that this should be accompanied by weak employment data. In the swap market, November is priced for the first Fed interest rate cut.
Non-farm employment data will be the last important data to come before the Fed, which will meet next week for the interest rate decision. The median expectation reflected in the Bloomberg survey is at 180,000 jobs. Bloomberg economists, led by Anna Wong, expect a relatively high employment rate of 222 thousand. However, economists also note that the household survey points to an increase in the unemployment rate.