Fixed Income

Not Just Any Yield

_{Posted on Nov 18, 2019}

The surge in bond valuations over the past year has driven income potential down for most traditional fixed income investors. Real (inflation-adjusted) yields have now fallen to negative levels in every developed market. As such, it has not been an easy time for fixed income investors looking to put money to work.

In recent months, Citi’s Global Investment Committee has turned to underweight global fixed income as yields drop to record-lows. While avoiding negative-yield bonds in local markets, investors should also be mindful of not just chasing any yield.

High Yield (HY):

Citi analysts are neutral on the global HY segment. In US HY, default rates near 2.5% are well below historical averages. Spreads are tight, though could face pressure if trade tensions escalate or growth data weakens. BB-rated yields are historically low, but Citi analysts prefer to keep HY bond quality high and duration short. Euro HY has gained 8.5% in the year-to-date, having indirectly benefited from the low/negative yield environment in the region and quantitative easing from the European Central Bank. Selectivity is particularly important when investing in lower rated issuers.

Investment Grade (IG):

Citi analysts expect that the next 12-months returns for US IG corporates are unlikely to be as robust as their performance so far (13.5% year-to-date). However, consistent with the preference in building high quality fixed-income portfolios, the segment remains overweight within the global fixed income space as it offers some of the best high quality yield opportunities. As policy rates are expected to drift lower, US IG bonds are also the preferred market for duration extension as curves are relatively less flat and investors are rewarded for wider spreads in longer maturities. Better value is seen in 5-10 year maturities.

With the year’s strong movements in fixed income markets, portfolio review is important to ensure that specific asset classes are not over-exposed.

_{By Citi Global Wealth Investments | Apr 12, 2024}

Q2 2024 | At a glance

This is an unusually positive time for markets. Inflation is slowing while corporate profits are rebounding. Global equity markets, as reflected by the MSCI World Index, are up around 10% year-to-date. Earnings have remained resilient in the face of policy action and we believe there is a broadening of equity performance, and it is spreading beyond US shores.

_{By Citi Investment Lab | Mar 15, 2024}

Investing 101: What might happen after the end of a US interest rate hiking cycle

Interest rates are a key monetary policy tool used to impact economic conditions. Changes in interest rates impact asset classes differently. We explore how the end of a Fed interest rate hiking cycle might affect US fixed income and equities.

Wealth Insights Asset Allocation Investing101 Equities Fixed Income

_{By Citi Investment Lab | Mar 1, 2024}

Investing 101: How To Build a Diversified Core Portfolio

A diversified core portfolio is typically a balanced and diversified collection of investments that aims to meet long-term investing goals. Citi discusses the key reasons for a diversified core portfolio.

Wealth Insights Asset Allocation Investing101 Equities Fixed Income

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(MLP’s) - Energy Related MLPs May Exhibit High Volatility. While not historically very volatile, in certain market environments Energy Related MLPS may exhibit high volatility.

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Market Specific Disclosures

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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.

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