Citigroup Research analysts Alex Saunders and Vinh Vo noted in their quantitative macro strategy report published on September 11 that although their macro model remains broadly in the "normal" range, strengthening inflation momentum, a modest decline in economic surprise indices, and a slight tightening of financial conditions have significantly increased the similarity between the current macro environment and the Federal Reserve's tightening cycle from 1988 to 1989. During that period, the Federal Reserve raised interest rates 16 times, with the federal funds rate target ultimately increasing to 9.8125%.
The report suggests that the current macro state exhibits symptoms of an "overheated economy," where both growth and inflation indicators are slightly above their long-term averages. At the asset allocation level, the model further increased its overweight allocation to equities to 4.0%, favoring emerging markets and U.S. equities, and shorting European, Japanese, and UK equities. In bonds, the model overweights Japanese and UK duration and maximizes short positions in U.S. Treasuries. For commodities, energy is currently the strongest expected performing asset, with the model heavily overweighting energy. In foreign exchange, the U.S. dollar replaced the Japanese yen as the preferred currency, due to waning market enthusiasm for the yen and comments from U.S. Treasury Secretary Scott Bessent regarding Japanese intervention.
Citi Research Report: Current macro environment shows increased similarity to the 1988-1989 Federal Reserve tightening cycle; models increase exposure to risk assets and favor the US dollar.
No AI analysis yet. Tap the "AI Analysis" button above to generate one now.
Disclaimer: This content reflects the author's personal views only and does not constitute investment advice.
24H Trending
-
1
South Korea's KOSPI index rose 5.18% from its previous close, now at 5,930.51.
-
2
SK Hynix is up 6.86% from its previous close, now trading at ₩1,433,000.
-
3
SK Hynix is up 5.26% from its previous close, now trading at ₩1,411,500.
-
4
SK Hynix is up 8.72% from its previous close, now trading at ₩1,458,000.
-
5
South Korea's KOSPI index rose 6.16% from its previous close, now at 5,985.55.
-
6
Samsung Electronics rose 7.88% from its previous close, now trading at ₩239,500.
-
7
Youngone wins 8.8 billion won refund in Scott acquisition dispute
-
8
Bloomberg: Prices for "super metals" used in nuclear energy, semiconductors, and other fields are soaring, with Freeport, the world's largest producer, considering increasing output.
-
9
SK Hynix's third-quarter operating profit exceeded expectations, primarily driven by strong demand for AI chips, and the company also announced a share buyback.
-
10
Veir completes $110 million Series C funding round
Markets Today
Recommended Reading


