Citi Wealth Insights

COMMODITIES: The late Q1 commodity sell-off is likely to fade quickly as temporary lockdowns give way to strong, diffuse growth, robust commodity demand and higher prices.

USD: Citi analysts - the Minutes to the FOMC March 17th meeting (where officials raised growth forecasts but left plans to leave rates on-hold through 2023 unchanged), may provide insights on the path to tapering asset purchases (which Citi analysts expect to commence in Q4).

Widening real yield differentials are starting to favor USD against EUR and JPY.

Citi analysts expect that gold prices could hover between US$1,700-$1,900/oz range for the rest of 2021 and remove their overweight allocation as long-term yields reverse their plunge.

Citi’s Global Investment Committee remains underweight global fixed income, but sees an improving return outlook for TIPS and opportunities in EM debt and variable-rate bank loans.

The rise in interest rates is pushing down higher valued “growth” equities more than lowly valued shares that are expected to be most profitable today, rather than in the distant future. Nevertheless in the longer term, the pullback in high growth and highly valued companies presents an interesting opportunity within Citi’s “Unstoppable Trends”.