The Fed will only stop tightening if there's a recession, and investors are stretching if they're hoping for a pivot, Citi's US investment strategist warns

If the US goes into a recession, the Fed will stop raising interest rates, according to a US investment strategist.

The Fed's trajectory needs to be asked what would change. "As long as the employment numbers remain strong, they are not going to change the path from here," Bitterly said. "This idea of a pivot or even a pause before we enter into a recession is really a long way off."

Market bulls have cheered on a recent rally in stocks after inflation came in below expectations. The increase in prices last month was less than expected. The 7% rally in the S&P 500 was spurred by investors speculating that inflation had already peaked, and that the Fed would ease up on rate hikes.

It's good to assume inflation is on the decline, but prices are still above the Fed's 2% target. Fed officials have made the mistake in the past of putting too much importance on one data point and the central bank has noted their policy actions would be both data- dependent and trend dependent.

Bitterly said that the 50-basis-point rate hike investors are expecting in December was not dovish of central bankers.

She noted that stock market rallies over 10% have been common in the past eight to ten bear markets. The S&P 500 is down around 16% this year compared to previous rallies.

She warned investors that the market will be volatile from here on out.

The economists have warned about a recession and rockiness in the stock market. El-Erian and Roubini warned that the US was at risk of a damaging recession.