Citi Wealth Insights

Citi analysts believe there are benefits in keeping portfolio exposure to strong sovereign bond markets such as US Treasuries, while avoiding many others.

Bond market movements have been reflective of negative interest rate policies, central bank purchases and lately, concerns over the economic impact of COVID-19.

A surge of COVID-19 infections outside of China, where the disease was first reported, has weighed on investor sentiment in recent days over its potential impact on economic growth and earnings. A more volatile market backdrop is seen in the period up ahead.

As the global supply of negative-yielding bonds surpasses $13tn, Citi analysts are underweight negative-yield bonds in local markets, instead preferring high quality USD bonds.

With more than 30 central banks cutting interest rates and core non-US rates near historical lows, the hunt for yield is likely to persist. Opportunities remain in selective markets, such as US Investment Grade corporates and USD-denominated Emerging Market Debt.

As 2019 draws to an end, we take a look back at 10 of the year’s most consequential headlines impacting the financial markets.