Citi Wealth Insights

Uncertainties and bouts of risk aversion could keep safe haven currencies like gold and JPY in demand. With the US Federal Reserve on alert to address USD supply / demand issues, monetary stimulus may pose headwinds to the USD, leaving it not quite the safe haven it used to be.

With central banks rolling out unprecedented levels of monetary easing, interest rates are expected to stay lower for longer. Cyclical-oriented sectors in US Investment Grade corporates may benefit in a new economic cycle, while Emerging Market Debt offer compelling valuations.

With supportive fiscal and monetary policies in place, Citi analysts are overweight global equities going into the second half. By region, US small and mid-caps, emerging Asia and Latin America are preferred. By sectors, long-term themes such as Health Care and Digitization are favored, while also adding to Real Estate Investment Trusts (REITs).

As global economies start to re-open from containment measures, uncertainties surround the pace of recovery, which is likely to be uneven across regions. Global GDP may contract by 3.5% in 2020, before growing 5.5% in 2021.

GBP: A significant fiscal boost with more to come – Sterling gets a boost as the UK Chancellor notes the government is moving to stage 2 in its economic policy response to Covid 19 with a focus on stimulating demand and protecting jobs.