U.S. Unemployment Rises and Major Banks Predict Significant Interest Rate Cuts

The U.S. economy is showing signs of strain as unemployment climbed from 4.1% to 4.3% in July, increasing the number of jobless Americans to around 7.2 million.

This labor market decline coincides with a massive $6.4 trillion drop in global stock markets over a three-week period.

Wells Fargo analysts are sounding alarms, urging the Federal Open Market Committee (FOMC) to shift to a ‘neutral’ policy stance to avoid worsening the economic downturn. In response, major banks are predicting significant interest rate cuts.

Bank of America anticipates a rate cut in September, while Wells Fargo and JPMorgan Chase foresee a 50 basis point reduction in both September and November. Citi expects a cumulative 100 basis point cut by November, aiming for a range of 3% to 3.25% by mid-2025.

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Why Investors Are Turning to Bonds During Economic Uncertainty

These anticipated rate adjustments reflect growing concerns about the economic stability in the U.S. and globally, suggesting that investors should prepare for potential financial instability in the near future.

Alexander Stefanov