Citibank says #Fed September 50 basis point cut likely #faiz

The market is currently pricing in a 43% chance of a 50 basis point cut

There is an interesting dynamic this week, with nonfarm payrolls due Friday and the blackout period starting Friday night. If the jobs report is in the mid-range, there won’t be much time for officials to signal that a 50 basis point cut is likely. Of course, they could always resort to leaking their views to the WSJ or someone else.

Citi has already seen enough of a 50 basis point cut to be likely, citing weaker JOLTS than in 2019.

Citi says: "The labor market is softer than before the pandemic, and continues to get softer, according to the July JOLTS report. Job openings fell from 8,184,000 in June (now revised down) to 7,673,000 in July. The ratio of job openings to unemployed individuals fell to 1.1 to 1, below the 1.2 to 1 ratio that prevailed just before the pandemic. The hiring rate rose to a still-low 3.5% from 3.3% as government hiring slowed. The layoff rate remains low at 1.2%, but the labor market appears to be at a turning point with sharper weakness to come. A 50 basis point rate cut is likely in September."