Research @ Citi Markets Edition: Shutdown Over - Why Investors Should Care
Nov 18, 2025
In this discussion, Alex Saunders, Head of Global Quant Macro Strategy at Citi, dives into the implications of the government shutdown's end. He believes improved economic data and a potential Fed rate cut in December could spark a Santa rally. Alex also analyzes labor market expectations, equity signals regarding Fed decisions, and how renewed liquidity may positively impact equities. Furthermore, he explores crypto market dynamics and their correlations with broader financial trends, all while providing insights for investors heading into year-end.
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December Fed Decision Hinges On Jobs
- The December FOMC is essentially 50-50 and hinges on incoming labor market data and inflation signals.
- Citi expects a December cut if payrolls weaken and tariff-driven inflation remains muted.
Alternative Data Signal Labor Slack
- Alternative data show signs of labor market slowdown, with ADP showing a 29k contraction in private employment for September.
- CitiEcon still forecasts a 25bp December cut despite market pricing nearer to 50-50.
Good News Can Be Bad For Fed Odds
- The market currently sits in a 'good news is good news' quadrant, meaning stronger NFP could actually lift stocks near the Fed meeting.
- But weaker data close to the meeting might be more positive by solidifying expectations of a Fed cut.