From Investing.com: 2024-08-02 09:22:02

Recession fears push two-year Treasury yields to lowest levels of the year, with Citi expecting more than 75 bp rate cuts by the Fed. Analysts suggest potential 50 bp cuts if economic data worsens, emphasizing the need for Fed to be proactive. Job report shows rise in unemployment to 4.3% with lower-than-expected payrolls at 114,000.

Fed Chair Powell notes policy rates at 5% provide flexibility to address economic weaknesses. Recent indicators like higher jobless claims and lower ISM manufacturing point to potential need for 25 bp cuts at upcoming FOMC meetings. Unemployment rate already high, requiring Fed to prevent further rise by moving to neutral policy rates near 3%.

Citi warns of tightening financial conditions despite impending rate cuts, urging Fed to go beyond market expectations to support economy. Transition to neutral stance may be necessary if economic data continues to deteriorate, reinforcing need for aggressive rate cuts. Fed may need to over-deliver on cuts to cushion economy.



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