Economy | US | Europe

Central Banks to the Rescue

_{Posted on Sep 16, 2019}

Last week, the European Central Bank (ECB) delivered significant monetary expansion to stimulate the economy and meet its 2% inflation target. This week, all eyes will be on the Federal Reserve as they meet on 17-18 September.

Europe: Deposit rate cut by 10bp to -0.5%, the lowest level ever. It is unlikely that rates will be further lowered this year given President Draghi’s concerns over the side effects of negative rates.

The Bank will purchase €20bn of bonds a month starting November to inject money into the economy.

Targeted longer-term refinancing operations (TLTROs) was extended again, with slightly lower rates, helping to provide cheaper financing for banks.

US: President Trump tweeted his longing for ECB style monetary policy in the US, demanding Federal Reserve to lower interest rates to “zero or less”. However, the background of ongoing US economic growth and the potential interim US-China trade deal, are casting doubt on the Fed's potential easing path.

Core CPI rose 2.4%yoy, the third straight monthly gain and the highest since 2008, indicating strong consumer spending.

Citi analysts think the Fed is unlikely to be swayed by this data at its 17-18 Sept meeting, so a 25bp rate cut is still likely. However, it could complicate the Fed's communication on forward guidance.

Citi’s investment strategy

Neutral on Fixed Income: Citi analysts see decreased opportunities in global bonds, especially at the short end of the yield curve, given that central bank easing is priced in.

That said, US bond market yields are still globally attractive. The average UST market yields 1.6%, which is around 130bp higher than the average non-US developed sovereign bond market. US Investment Grade bonds also offer relative value, especially in 5-7 year maturities.

Fixed income also still performs a useful function in dampening portfolio volatility. This includes higher quality emerging markets debt which Citi favours.

_{By Citi Global Wealth Investments | Apr 25, 2024}

Weekly FX Focus - AUDNZD – The Battle Of The Antipodeans

The AUDNZD cross remains resilient around the 1.0850-80 area due to the outperformance of the Australian economy. However, markets are pricing a higher terminal rate of 4.5% for the RBNZ by the end of H1 2025 compared to 3.75% for the RBA. Will the more attractive rates in NZD help to reverse the outperformance of AUD?

FX Economy

_{By Citi Wealth Insights | Apr 23, 2024}

Weekly Market Analysis - Be Ready for the Unexpected

In the hours after Iran launched missiles and drones at Israel on April 13, pundits were quickly jumping to conclusions. Some saw the moment as the tipping point for a far more destructive and wide regional conflict. Others were quick to dismiss it as a meaningless display of force.

Wealth Insights Weekly Market Analysis Economy Asset Allocation

_{By Citi Wealth Insights | Apr 22, 2024}

Japan’s nominal wage growth may set the BoJ to pursue a faster pace of tightening in H2’2024

JPY: Japan’s nationwide core CPI (excluding only fresh food) rises 2.6% YoY in March, down from a 2.8% YoY advance in February. The result is also slightly weaker than consensus expectations for a 2.7% YoY rise.

FX Economy

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and should seek independent advice before making an investment decision. You should obtain and consider the relevant product terms and conditions and risk disclosure statement, and consider if it’s suitable for your objectives, financial situation or needs before making any investment decision. Investors are advised to obtain independent legal, financial and taxation advice prior to investing. Investments are not deposits, are not protected by the Deposit Protection Scheme in Hong Kong
and are subject to investment risk including the possible loss of the principal amount invested.

This communication does not constitute the distribution of any information in any jurisdiction in which it is unlawful to distribute such information to any person in such jurisdiction.

CHKL does not provide discretionary portfolio management services.

Singapore: This communication is distributed in Singapore by Citibank Singapore Limited (“CSL”) to selected Citigold/Citigold Private Clients. CSL provides no independent research or analysis of the substance or in preparation of this communication. Please contact your Citigold/Citigold Private Client Relationship Manager in CSL if you have any queries on or any matters arising from or in connection with this communication. Investment products are not insured under
the provisions of the Deposit Insurance and Policy Owners’ Protection Schemes Act of Singapore and are not eligible for deposit insurance coverage under the Deposit Insurance Scheme.

This communication is for general information only and should not be relied upon as financial advice. The information herein has no regard to the specific objectives, financial situation and particular needs of any specific person and is not intended to be an exhaustive discussion of the strategies or concepts mentioned herein or tax or legal advice. Any person interested in the strategies or concepts mentioned herein should consult their independent tax, legal, financial or other advisors,
as appropriate. This communication does not constitute the distribution of any information or the making of any offer or solicitation by anyone in any jurisdiction in which such distribution or offer is not authorized or to any person to whom
it is unlawful to distribute such information or make any offer or solicitation.

Before making any investment, each investor must obtain the investment offering materials, which include a description of the risks, fees and expenses and the performance history, if any, which may be considered in connection with making
an investment decision. Interested investors should seek the advice of their financial adviser about the issues discussed herein as appropriate. Should investors choose not to seek such advice, they should carefully consider the risks associated
with the investment and make a determination based upon the investor’s own particular circumstances, that the investment is consistent with the investor’s investment objectives and assess whether the investment product is suitable for
themselves. Although information in this document has been obtained from sources believed to be reliable, CSL does not guarantee its accuracy or completeness and accept no liability for any direct or consequential losses arising from Its use.

CSL does not provide discretionary portfolio management services.

UAE: This document is distributed in UAE by Citibank, N.A. UAE. Citibank N.A. UAE is licensed by UAE Securities and Commodities Authority (“SCA”) to undertake the financial activity as Promoter under license number 602003.

Citibank N.A. UAE is registered with Central Bank of UAE under license numbers BSD/504/83 for Al Wasl Branch Dubai, 13/184/2019 for Mall of the Emirates Branch Dubai, BSD/2819/9 for Sharjah Branch, and BSD/692/83 for Abu Dhabi Branch.

This is not an official statement of Citigroup Inc. and may not reflect all of your investments with or made through Citibank. For an accurate record of your accounts and transactions, please consult your official statement. Before making any investment, each investor must obtain the investment offering materials, which include a description of the risks, fees and expenses and the performance history, if any, which may be considered in connection with making an investment decision. Each investor should carefully consider the risks associated with the investment and make a determination based upon the investor’s own particular circumstances, that the investment is consistent with the investor’s investment objectives.
At any time, Citigroup companies may compensate affiliates and their representatives for providing products and services to clients.

United Kingdom: This document is distributed in the U.K. by Citibank UK Limited and in Jersey by Citibank N.A., Jersey Branch.

Citibank UK Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Our firm’s Financial Services Register number is 805574. Citibank UK Limited
is a company limited by shares registered in England and Wales with registered address at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, Companies House Registration No. 11283101.

Citibank N.A., Jersey Branch is regulated by the Jersey Financial Services Commission. Citi International Personal Bank is registered in Jersey as a business name of Citibank N.A. The address of Citibank N.A., Jersey Branch is P.O. Box 104, 38 Esplanade, St Helier, Jersey JE4 8QB. Citibank N.A. is incorporated with limited liability in the USA. Head office: 399 Park Avenue, New York, NY 10043, USA.

DISCLAIMER [+]

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