Awaiting direction: US Outlook

Research evidence excerpt

Awaiting direction: US Outlook

FICC Research

Economics

3 July 2026

US Outlook

Awaiting direction

Warsh’s remarks at Sintra provided no clues about how policy

might respond to data just as the economy approaches a

critical juncture. June's jobs data hinted at moderation, but Jonathan Millar +1 212 526 4876

did not settle the debate. For now, this has both the economy jonathan.millar@barclays.com

and markets awaiting direction. BCI, US

Marc Giannoni

+1 212 526 9373

• Warsh's remarks at Sintra reinforced his strong aversion to forward guidance and suggest the marc.giannoni@barclays.com

Fed's framework review could produce significant changes to communications policy. The BCI, US

appointment of Mervyn King suggests that the communications task force may eventually

Pooja Sriram

favor a framework that explains policy decisions while de-emphasizing signals about the +1 212 526 0713

future rate path. pooja.sriram@barclays.com

BCI, US

• June's employment report provided tentative signs of labor market moderation, with payroll

Colin Johanson gains slowing and prior months revised lower. However, continued weakness in labor-force

+1 212 526 8536

participation, particularly among workers aged 25-34, suggests that slower immigration and

colin.johanson@barclays.com

other labor supply constraints continue to reduce the speed limit of sustainable job growth. BCI, US

• Our baseline remains an extended hold in policy rates, conditional on inflation, activity, and

labor market conditions moderating through the summer. The principal risk is that gains in

employment and spending re-accelerate while labor supply remains constrained, keeping

inflation pressures elevated and placing hikes on the table.

The new framework under Warsh is still taking shape