CITIC Securities Predicts Fed Rate Cuts Amid US Job Market Surprises

CITIC Securities, a leading investment bank in China, has maintained its prediction that the Federal Reserve will cut interest rates twice this year. The research firm's latest report, released on February 10th, highlighted the impact of various factors on the US job market and the broader economy.

The report noted that the US added fewer jobs than expected in January 2025, with the healthcare services, retail, and government sectors being the main contributors to the shortfall. However, the unemployment rate declined, and wage growth increased, indicating a healthy job market overall. The wildfires in Los Angeles and severe cold weather in other parts of the US did not have a significant impact on the job market.

The report also discussed the potential impact of the Elon Musk-led Department of Government Efficiency (DOGE) on the 2025 new non-farm payroll. The non-farm data broke the market's optimism following the December CPI release, pushing back rate cut expectations. The market's focus will now be on Trump's tariff uncertainties and inflation expectations.

CITIC Securities expects the US stock market to maintain high volatility. If the January CPI or tariff plans exceed expectations, US bond yields and the US dollar index may rise again. The research firm maintains its view that the Fed will cut interest rates twice this year, each time by 25 basis points.