The upcoming May employment report, to be released tomorrow, will be one of the final data releases that will influence market expectations for another potential rate hike on June 14, according to Citi. As the Federal Reserve enters a blackout period this Saturday, these labor statistics are particularly significant.
Citi predicts solid payroll growth of 200k, 0.3% increase in average hourly earnings, and a steady unemployment rate of 3.4%. These figures, if confirmed, would further assure Fed officials of the necessity for additional tightening in response to stronger economic activity and inflation.
Despite market attention being drawn to potential downside risks, April's employment data emphasized the continuing labor supply constraints. Citi maintains its prediction of 25 basis point rate hikes in both June and July.
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