Most investors expect a soft landing, says Citi By Investing.com

Investing.com — Most investors anticipate a soft landing for the U.S. economy, according to a recent Citi survey.

In their weekly Global Markets Strategy note, Citi analysts revealed that more than two-thirds of their clients are in the “soft landing camp”, with only around 21% expecting a more serious hard landing.

The remaining 11% predict a “no landing at all” scenario.

The Citi survey also highlighted investors’ expectations for the Federal Reserve’s terminal rate. A significant 68% of respondents believe the Fed Funds rate will settle between 3% and 3.75%, with about 17% forecasting it will fall below 3%.

Meanwhile, Citi says about 14% expect the terminal rate to reach or exceed 4%.

The note points out that several key economic indicators, such as core CPI, ISM manufacturing and non-farm payrolls (NFP), are currently at levels that would typically prompt the Federal Reserve to start cutting rates.

This suggests that if the economy does indeed achieve a soft landing, there could be deeper rate cuts this cycle compared to previous periods of economic contraction.

Citi analysts said that “should a soft landing be achieved, it would not be surprising to see deeper cuts in this cycle compared to previous easing cycles that coincided with soft landings.”

Citi’s findings indicate that the prevailing sentiment among investors is one of cautious optimism, with most expecting the economy to avoid a severe recession and the Federal Reserve to implement moderate interest rate cuts as a result.

This aligns with the broader market narrative that has gained traction in recent months.