CITIC Securities Says U.S. Rate-Hike Expectations Still Have Room to Ease

A CITIC Securities research note said U.S. market pricing for interest-rate hikes still has room to be revised down. According to Jin10, CITIC Securities said the U.S. unemployment rate was 4.2% in June 2026, below expectations, and the increase in nonfarm payrolls was also below expectations. The firm said the leisure and hospitality sector, which was a main contributor in May, became a drag on the June nonfarm payroll data. However, it noted that non-seasonally adjusted employment in the sector was still rising, and that weaker month-on-month growth than in the same period of previous years appeared as negative growth after seasonal adjustment. CITIC Securities said the decline in the unemployment rate was influenced by a drop in the labor force participation rate. It added that a sharp one-month decline in the participation rate for workers aged 25 to 54 may have been related to the World Cup, and said it should not be interpreted as a trend change. The note said wage growth remained relatively high, indicating that inflation stickiness persisted. After the data release, the market revised down rate-hike pricing, but CITIC Securities said the nonfarm payroll data, which it described as not fundamentally weak, was not enough to shift market expectations toward clearly looser liquidity. The firm said it maintained its view that the Federal Reserve would keep interest rates unchanged within the year, and reiterated that market expectations for rate hikes still had room to be revised down.