(Bloomberg) -- Akshay Singal took little pleasure in getting the Federal Reserve’s rate-cut call right on Wednesday.
Sure, the Fed opted for the half-point reduction that Singal, the global head of short-term interest rate trading at Citigroup Inc., boldly predicted a couple weeks ago. But the cautious tone from Chair Jerome Powell and the rest of the board left him re-thinking the trading desk’s bet that there’ll be more of those big cuts to come.
“This was a fairly hawkish 50 basis point cut,” Singal said in an interview. “All-in-all the Fed is probably happy with that outcome, it wasn’t perceived as too much easing, but the negative aspect of that is the market is confused.”
Treasuries reversed course shortly after the Fed’s initial announcement Wednesday to close lower across the curve, while the S&P 500 swung from gains to losses, and a Bloomberg gauge of the dollar finished the US session higher.
His disappointment, in many ways, mirrors the broader market’s sentiment.
The Fed’s projections — known as the dot plot — show only a narrow majority favor lowering rates by at least an additional half-point this year. Singal, who earlier this month said “this Fed does not take baby steps” and would show “no hesitation” in cutting rates aggressively, is already rethinking his own call.
Powell is the one driving policy, he noted, but the chair is clearly more dovish than the broader board, and that’s giving him pause.
“He holds a lot of power and that’s going to be a key focus for the next few months — understanding just how far to the dovish side he is,” Singal said. The next two jobs reports, on Oct. 4 and Nov. 1, will also heavily influence the Fed’s next move, he added.
Citi economists Veronica Clark and Andrew Hollenhorst, for their part, said after Wednesday’s policy announcement that they still expect the Fed to cut interest rates by an additional 50 basis points in November and 25 basis points in December.
But for Singal, the November rate decision is now effectively a toss-up given Powell’s rhetoric and the Fed’s projections.
“It’s a coin flip on whether the Fed goes by 25 or 50 basis points at the November meeting,” he said. “It will come down to data dependency.”
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