Citi Recommends Trade for Reflation, Fed Rate Hikes in 2026-2027

Federal Reserve interest-rate cuts are likely to lead to an economic rebound next year that spurs investors to bet on rate increases by late-2027, Citigroup Inc. strategists say.

Selling Treasury debt on that assumption “is premature,” however, as Fed policy makers “are still sounding dovish for now” and a US government shutdown “will make reading the health of the economy increasingly messy for the next few weeks,” global macro strategists Adam Pickett and Dirk Willer wrote in a report Friday.