Finally giving in! Citi shouts "Reasons for rate hikes are dead," is a rate cut coming in October?

Wall Street's stubbornness ultimately cannot withstand the slap of data.

Just a few months ago, the market was fiercely debating "to hike or not to hike," with hawkish officials one after another vowing that inflation was not under control and they couldn't loosen policy.

Then the nonfarm payroll data came out, and Citigroup Research directly issued a report with a three-word title: No more hikes.

In the U.S. Economic Weekly published on July 2, Citi stated very plainly: the factors that previously supported the hawkish stance—rising oil prices, accelerating wages, core PCE above target, etc.—have since faded.

In layman's terms: "The things we worried about before are no longer a big deal; the reasons for rate hikes have disappeared."

The core trigger that caused Citi to "capitulate" was that jaw-dropping set of nonfarm payroll data.

June added only 57k jobs, less than half of market expectations, and the previous two months were revised down by a total of 74k.

This is not a cooling job market; it's a job market cliff.

Although the unemployment rate fell back to 4.2%, the reason was a decline in the labor force participation rate—fewer people looking for jobs naturally lowers the unemployment rate, which is not good news worth celebrating.

Based on these data, Citi provided a clear rate cut timeline: hold steady at the July and September meetings, first 25 bps cut on October 28, another 25 bps cut in December, bringing the rate range to 3.0%–3.25% by year-end.

This pace is much more dovish than the market previously expected, directly igniting enthusiasm for risk assets.

The market reacted faster than words.

Spot gold stood above $4,200 in early trading on July 6, hitting a two-week high; the U.S. dollar index came under pressure; U.S. stock futures collectively rallied.

Current market pricing shows the probability of holding rates steady in July is about 77%, and rate cut expectations are gradually being priced in.

Of course, Citi didn't just pull this out of thin air.

Their reasoning chain is clear: falling oil prices eased inflation pressures, slowing wage growth weakened the wage-price spiral concern, and core PCE, while still above target, is trending downward.

All three hawkish pillars have loosened, so the need for further rate hikes naturally disappears.

The next key verification point is the Fed's June meeting minutes on July 9.

Then the market will see what the Fed is actually discussing internally—whether it's "considering a rate cut" or "staying on hold," subtle wording differences could trigger a new round of volatility.

For ordinary investors, the significance of Citi's report lies in: the macro trading logic is shifting from "tightening" to "easing."

If a rate cut really happens in October, it will benefit not only gold but also crypto, tech stocks, and other liquidity-sensitive assets.

But keep an eye out—if inflation data suddenly rebounds, all these expectations could be overturned.

After all, we've seen the Fed's "pivot" act before.

Today Citi says "reasons for rate hikes are gone," tomorrow they might say "it's too early to cut rates."

Believe half, leave half—that's the best approach to dealing with this Fed.

$BTC $ETH
#花旗称加息理由已消失，预计10月降息