US Economics: The Daily Update - No catalysts

Research evidence excerpt

US Economics: The Daily Update - No catalysts

US Economics

21 July 2026 Citi Research

Despite a very cool core inflation reading and underwhelming job growth in June,

interest rate markets continue to price in the potential for hikes later this year.

That’s not surprising given that regional fed presidents and voters Logan and

Hammack continue to support raising rates, despite the recent data.

Usually that would make the upcoming FOMC meeting highly anticipated and

market relevant. Investors might be wondering if the statement would be tweaked

to suggest marginally more comfort that inflation would slow. They would be

listening for whether or not the Chair had adjusted his economic outlook based on

recent data.

But neither of those developments are likely next week. The statement will likely

repeat agreed upon facts about the economy exactly as it did in June. Chair Warsh

will give no forward guidance and decline to comment on recent data. The only

market event at the meeting might be the dissents of Logan and Hammack, but

that will not come as a hawkish surprise.

With the FOMC meeting less market relevant, the next major catalyst might not be

until the July jobs report to either confirm or overturn the softening in June.

Even more important will be July CPI as officials will have a harder time dismissing

two consecutive cool core inflation reading and year-on-year core CPI falling below

2.5% - around a rate of increase considered normal prior to the pandemic.

Figure 1. Market is pricing in a hike this year Figure 2. Oil prices has been volatile recently

cumulative pricing at each meeting LHS 07/21/26 WTI Crude Oil Price Daily US Average Gasoline Prices

market pricing policy rate RHS 07/21/26 110 4.9

4.2

38 4.1 100 4.4

33 4.0

28 3.9 90

3.9

bp 3.8 %