Citi Wealth Insights

Bifurcating risks for Gold but base case trends lower on Fed tightening cycle - Gold has consolidated in a narrow mid$1,700/ low$ 1,800 range for several months with no clear bullish or bearish impulse. Nevertheless, bullion ETFs continue to show a net outflow bias — capping prices.

Evergrande is one giant roller coaster of a real estate company. But why would its potential default spark a global selloff? The answer is worrying. In Citi’s view, worrying is a form of confirmation bias, the human tendency to aggregate information or “facts” into what must certainly happen next. This article assesses the worry points impacting investor’s thinking.

CitiFX weekly updates to the house views and strategy - for the week commencing September 27, 2021

EUR & GBP: The pick-up in euro area and UK inflation has proved to be faster, larger and shows signs of being more persistent than previously expected. The key question now is whether this can morph into more persistent inflation, or whether it reverts into transitory disinflation in the years ahead. This will have implications for ECB and BoE monetary policy. For now, Citi analysts lean towards the latter view.

GBP: As expected, the BoE MPC votes unanimously to keep the Bank Rate unchanged at 0.75%. However, dissent to support stopping asset purchases grows to two who mention rising inflation expectations.

USD: The September FOMC overnight sees the Fed’s median dots shift higher by more than consensus while Chair Powell also signals tapering of $120bln/month asset purchases will likely be announced in November and taper will proceed at a pace around $15bln/month so long as data evolves as expected.