Citi Predicts 25 Basis Points Interest Rate Cut by Fed in December

Summary

Citigroup expects a quarter-point interest rate cut from the U.S. Federal Reserve in December, in line with predictions from J.P. Morgan and Goldman Sachs amid recent policy discussions.TradingView

Impact Analysis

So Citigroup is basically confirming what the market already suspects—a 25 basis point cut by the Fed in December. This aligns with the CME data showing an 86.4% probability of such a move.AnueSec The timing is interesting, given the recent drop in U.S. initial jobless claims, which has kept rate cut expectations high.AnueSec This could lead to lower short-term implied volatility for options on swaps, as noted by Citigroup’s Mike Chang.TradingView For investors, this means we might see a boost in interest rate-sensitive assets like gold, which has been struggling with its traditional pricing framework but could gain from lower nominal and real rates.Zhitong Also, keep an eye on Tether and other entities heavily involved in interest rate trades—they might face income pressures and increased scrutiny.AnueSec Bottom line—position for a rate cut but be mindful of the broader implications across different asset classes.