HALISTER1: U.K. Referendum May Influence Fed More Than Payrolls: Citigroup

U.K. Referendum May Influence Fed More Than Payrolls: Citigroup

(Bloomberg) -- Referendum risk makes it hard for the Fed to move in June and introduces uncertainty about July/September because of an additional 6-to-12 weeks for things to go wrong, Citigroup head of G-10 FX strategy Steven Englander writes in note received today.
  • Importance of U.S. non-farm payrolls is “inversely proportionate” to U.K. referendum risk, says Englander
  • It is unclear what level of uncertainty the Fed is willing to deal with on the referendum outcome;
    • To be worried they have to think that a ‘leave’ vote is likely and market reaction will be so disruptive that patience is warranted
  • Today’s unemployment rate may be more important than average hourly earnings, says Englander
  • If data drops from the 190k+ range, the question is whether the economy is slowing or running out of available bodies
  • Citi sees 140k new jobs vs consensus among economists polled by Bloomberg of 160k, well below the six-month average of 220k and 12-month average of 224k; range of forecasts spans 90k to 215k
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Source: BFW (Bloomberg First Word)

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Steven Englander (Citigroup Inc)

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