Citi’s Rob Rowe: A Fed easing cycle into a soft landing is very positive for risk assets

Market Outlook - City Research expects the S&P 500 to reach 6,600 by year-end, suggesting potential near-term volatility in Q3 [2][3] - City Research anticipates the S&P 500 to reach 6,900 by the end of the first half of next year, with a bull case of 7,200 [2] - City Research suggests buying during any volatility in Q3 [3] Federal Reserve and Monetary Policy - City Research anticipates two more Fed rate cuts by the end of the year and potentially two more in the first quarter of next year due to labor market weakness [4] - A Fed easing cycle into a soft landing is considered very positive for risk assets [7] Gold Market - A Fed easing cycle, geopolitical concerns, and a potentially slowing economy are considered positive factors for gold [5] - Central banks continue to buy gold, supporting diversification [4][5] - Gold price could still see some upside from current levels [5] Labor Market and Economy - City Research anticipates unemployment to rise to approximately 48% by the end of the year [7] - The US is experiencing a growing infrastructure economy alongside a weakening labor market [6] - Stronger payroll data could negatively impact equities [6] Tariffs - The effective US tariff rate is currently around 18% [8] - The effective tariff rate could potentially increase to 20% with sectoral tariffs on pharmacy or electronics [9]