US Economics Weekly: Oil fills Fed guidance void

Research evidence excerpt

US Economics Weekly: Oil fills Fed guidance void

US Economics Weekly

24 July 2026 Citi Research

Treasury yields followed oil prices higher this week. There were no domestic

catalysts with the Fed in a communications blackout period and no major data

releases.

From our perspective, the economic outlook is little changed and does not warrant

a rate hike. The unemployment rate has been "stable" around its current 4.2% rate

and jobless claims moved lower this week, which will keep Fed and market

attention focused on inflation and oil prices.

Figure 1. The unemployment rate would have moved higher Figure 2. Initial jobless claims have been at low levels but

if not for participation dropping following a similar pattern as recent years

unemployment rate LHS Unempl. Rate with May participation Initial claims 2023 Initial claims 2024

6 Initial claims 2025 Initial claims 2026

5.5

5 Thous. 240

230 % 4.5 avg

4 4-week 210

3.5 200

Jan-17 Jun-17 Nov-17 Apr-18 Sep-18 Feb-19 Jul-19 Dec-19 May-20 Oct-20 Mar-21 Aug-21 Jan-22 Jun-22 Nov-22 Apr-23 Sep-23 Feb-24 Jul-24 Dec-24 May-25 Oct-25 Mar-26

© 2026 Citigroup Inc. No redistribution without Citigroup’s written permission. © 2026 Citigroup Inc. No redistribution without Citigroup’s written permission.

Source: Citi Research, BLS Source: Citi Research, DOL

The dip in jobless claims is another sign that July payrolls may be stronger than the

soft reading in June, but claims are just following the seasonal pattern of prior years

and should begin climbing again in coming weeks. The pattern has also been for a

stronger July payrolls reading to come together with downward revisions to June. In

2024 and 2025, the unemployment rate increased over the summer and the plunge

in participation in June sets up the potential for a repeat this year.