Citi‘s Most Read – Economics

Research evidence excerpt

Citi‘s Most Read – Economics

US Economics - FOMC minutes show no urgency to hike

Minutes from the June FOMC meeting reflect a committee divided about whether

rate hikes will ultimately be required, but with little urgency to hike rates in the

near term. The weaker jobs reading subsequent to the meeting will have weighed

against the case for rate hikes. Markets pricing a significant probability of a hike in

July and close to a full hike by September appear excessively hawkish relative to

the Fed’s reaction function.

Andrew Hollenhorst

US Economics Weekly - Shifting balance of risks

The decline in oil prices, softer upcoming core inflation readings and downward

revisions to core PCE inflation should reduce market and Fed official concerns

about inflation upside. The unemployment rate has been “stable” but would have

risen to 4.6% in June if not for a sharp drop in labor force participation. Softer labor

market data in coming months should renew Fed officials and market focus on

downside risk to employment. The shift in the perceived balance of risks should

lead interest rate markets to price-out hikes and price-in cuts.

Andrew Hollenhorst | Veronica Clark | Gisela Young

Payroll job growth slowed in June Core CPI sub-2.5%YoY by August

Payroll growth Payroll growth - 12mth MA Core PCE YoY Core CPI YoY

5.5%

250 Payroll growth - 6mth MA Payroll growth - 3mth MA

4.9%

150 4.3% thous

100 chg. 3.7% growth, 50 % 3.1%

job YoY

Monthly -500 2.5%1.9%

-100 1.3%

-150 0.7%

Jan-24Feb-24Mar-24Apr-24May-24Jun-24Jul-24Aug-24Sep-24Oct-24Nov-24Dec-24Jan-25Feb-25Mar-25Apr-25May-25Jun-25Jul-25Aug-25Sep-25Oct-25Nov-25Dec-25Jan-26Feb-26Mar-26Apr-26May-26Jun-26 Jun-23 Dec-23 Jun-24 Dec-24 Jun-25 Dec-25 Jun-26 Dec-26 Jun-27

European Economics - Italy: The Return of Political Risk