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Citi: Brainard Would See Dovish Reaction

US OUTLOOK/OPINION
  • Citi see Powell's re-appointment as their base case. It is the path of least resistance with the economy and inflation becoming prominent political issues in the run up to midterm elections.
  • Brainard is the most likely alternative candidate, and is markedly more dovish.
  • The very immediate market reaction to Powell being replaced would be slightly risk negative, following by bull steepening and USD weakness.
  • If Powell is reappointed, would expect a counter reaction to price in more hikes as Brainard factor priced out.

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