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2025 Wealth Insights
Investment Strategy Bulletin
FX Focus

Building Quality into Portfolios

6 June 2025

In these volatile times, we are advocating a shift to quality with scale and balance sheets to weather any macroeconomic storms. The Global Investment Committee recently left its tactical asset allocation levels unchanged but cautioned that it may be too early on to call an end to the tariff wars. In the meantime, we are biased towards quality.

Here are our views for this quarter and beyond

Quality Amid Chaos

Normally, when we observe extreme negativity in markets, we think of this as an opportunity to take advantage of others’ fear. But it’s not clear to us that we’ve reached peak negativity. While the pace of downward revisions has been swift, the magnitude of the revisions remains muted and bottom-up EPS estimates still point to 8% growth for 2025. Barring a rekindling of animal spirits and a decisive resolution to trade tensions, we expect further downward revisions. While there has been an equity markets recovery in the US from early April lows, we believe there is likely to be further deterioration in the second half of the year as more data points emerge on the tariff picture. In this scenario, we are biased towards quality – companies with scale, strong cash flow, high gross margins, balance sheets, among others, to weather any potential economic storm.

The Global Investment Committee View

The Citi Wealth Global Investment Committee left its tactical asset allocation unchanged in its latest meeting. We continue to digest Q1 earnings releases and look ahead to key economic data releases in the coming days. Given the range of scenarios for global markets arising from the Trump Administration’s tariff negotiations and other policy initiatives, we are comfortable for now holding our neutral allocation to global equities. For fixed income, we remain slightly shorter in portfolio duration than our strategic benchmark and underweight high yield and emerging markets credit, while maintaining our overweights in a diversified basket of investment grade credit allocations.

Quality Fixed Income

Quality can also come in the form of fixed income. Here, the Chief Investment Office is advocating short-term quality fixed income that provides steady income amid volatile markets. Intermediate-duration IG credit offers higher yield than equivalent U.S. Treasuries while the current macro uncertainty could mean that investors might want to consider short-term bonds in lieu of cash in the near-term.

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Investing in a Divided World

7 May 2025

We may be past the peak tariff shock, but we do not expect a rapid de-escalation or near-term resolution that will sustainably buoy corporate, consumer, or investor sentiment. Citi's Chief Investment Office is stressing patience for investors looking to deploy cash in this volatile market and we reiterate our call that this isn’t the time to add risk.

Our views for the second quarter:

Build or Rebuild Portfolios

We are not advocates of adding risk in this macroeconomic environment. Further market pullbacks may provide opportunities to build or rebuild core portfolios. However, we are focused on quality. For clients who are already fully invested with a long-term horizon, we recommend a higher quality tactical mix biased towards free cash flow generation, manageable leverage and stable earnings. We do not advocate liquidating at this stage.

Ride Volatility with Investment Grade Bonds

To deal with the tariff shock, Citi’s Global Investment Committee raised the Investment Grade (IG) US bond allocation. Intermediate-duration IG credit offers higher yield than equivalent US Treasuries while the current macro uncertainty could mean that investors might want to consider short-term bonds in lieu of cash in the near-term. Intermediate duration allows investors to reduce near-term reinvestment risk and avoid other volatile asset classes while locking in yields, which remain above pandemic levels.

Stay Diversified

We believe investors should consider asset classes that do not correlate with typical market cycles and that are uncorrelated to public markets. Clients can consider a combo of cash & core fixed income strategies to capture yielden it back onto investor radars. Within tech, we advocate diversification in software, robotics, and leading semiconductor equipment makers.

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US Hikes Import Taxes Ten-Fold to Deglobalize

4 April 2025

The recent tariffs has caused fear and panic in the markets with the S&P 500 falling 4.6% in a single day. Our Chief Investment Officer (CIO), Kate Moore, sets out to explore the true impact of these tariffs and shares our findings in a special webcast.

Shock and Awe
The Trump administration’s April 2 tariff announcements surprised the market with their scale and their breadth. Our estimate is that full delivery of these tariffs would increase 2024’s effective tariff rate by 10x, to nearly 25% - meaningfully higher than the 10-15% range being discussed by the investment community before the announcement. Our best estimate is that these policies would generate a $750 billion increase in US taxes in the year ahead, amounting to a fiscal tightening of 2.5% of GDP.
Tariff next steps
This week’s announcements were only the beginning of a critical phase of tariff negotiation and implementation. As of today, broad-based 10% tariffs will be imposed on April 5, and more targeted measures will take effect on April 9. In theory this opens up a window for major trading partners to negotiate with the US. However, we are skeptical that global leaders will immediately rush to offer aggressive concessions.
Earnings on our radar
Even if the tariff-induced volatility calms, the near-term calendar is packed with equity catalysts as 1Q25 reporting season kicks off on Friday, April 11. While the earnings releases may be history, companies will have an opportunity to update the analyst community on their forward guidance and tariff mitigation strategies. We believe the tone and content of earnings calls will be infinitely more important than the results from the first three months of this year.

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Data resilience despite policy instability

09 June 2025

Recent labor market indicators point to a cooling, but not collapsing, job market. While the number of jobs added and the unemployment rate were largely unchanged in May, 200k individuals have left the workforce since January. After heavy discussion earlier in the year around federal government job cuts, economists have shifted focus to a growing number of private sector layoff announcements, including those from major employers like UPS, Microsoft, Walmart, Starbucks, and Chevron. So far, these anecdotes have yet to show up in hard data. We view the near-term benign labor market and temporarily stable inflation as favorable for an on-hold Federal Reserve, keeping policy rates elevated and supportive of our short-duration tilt in fixed income.

As we discussed in last week’s CIO Bulletin(opens in a new tab), the current US tax bill now under Senate review will likely have implications for the persistence of the US fiscal deficit, and in turn may contribute to higher US Treasury yields. Recently, the market has newly focused on an obscure set of potential new rules in the House version of the bill called “Section 899.” This section concerns potential taxation of foreign-owned investments in the US. While it is likely the Senate will revise these provisions in the face of heavy lobbying, we view the potential inclusion of this language as disruptive to global asset allocators’ optimal exposures to US assets and would contribute to further USD weakness. We recently added to gold along with European and Chinese equities to diversify portfolios against a potential reduction in appetite for US assets over time.
With the S&P 500 index up over 20% from its April low and less than 3% from its all-time high, the market has largely priced out the potential future negative impact of recent tariff announcements. The recent US international trade court ruling against the use of IEEPA for tariffs encourages both market participants and trading partners to view end-state tariffs as far less severe in scope and scale than the market feared on April 2nd, even as reciprocal and sectoral tariffs may take many months to finalize. We believe corporate management teams will delay large capex (ex-AI) and hiring plans until further clarity on trade rules, leading to slower economic growth and shallower EPS gains in 2H25. As such, we remain neutral on aggregate equity exposure and are holding off on adding to risk in the near-term. Our exposures remain biased towards high quality, secular growth (like AI) which we expect will outperform trade-sensitive cyclicals.
Portfolio considerations: The Citi Wealth Global Investment Committee met this week and made several adjustments to improve portfolio quality and diversification (please see our June Asset Allocation(opens in a new tab)).

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A Tale of Two Macro Narratives

02 June 2025

This week’s market dynamics were a microcosm of the story we’ve been telling over the past month: AI investment and tariff noise are both here to stay.

While fears over Chinese AI upstarts and US export restrictions drove a selloff in AI infrastructure stocks earlier this year, results from earnings season confirmed the durability of AI-enabler earnings and helped prices rebound. We believe the sheer scale of global data center capex should continue to support economies and equity risk over the medium term. For context, during Q1 earnings season, the big four hyperscalers reiterated their plans to invest $324bn this year, or 1.1% of US GDP. This figure doesn’t include recently announced investments from Gulf states or the US Stargate program. With margin pressures already mounting for many firms, we believe AI adoption is likely to accelerate as firms seek to boost workforce productivity. We therefore continue to favor AI-related investments as a secular source of growth within equity markets.
While this week’s court decisions blocking (and unblocking) broad-based US tariffs are likely to slow the pace of trade deal announcements, we expect the administration to adjust its strategy. We continue to believe widespread use of tariffs will be a feature of US policy for the next 3 and a half years and economic impacts will remain difficult to judge. Recent "soft data" surveys indicate a slight rebound in business and consumer sentiment as tariffs are rolled out with somewhat less intensity. Meanwhile, we view the resiliency in real economic activity data as reflective of a pull-forward in demand ahead of tariffs. While we ultimately think businesses and consumers will still need to share the burden of higher tariffs, benign current conditions and still-elevated inflation concerns support an on-hold Fed for now. Meanwhile, we expect monetary policy divergence over the balance of 2025 as other global central banks have more freedom to ease.
We expect the Senate will make material revisions to the House-passed reconciliation bill in the coming weeks, and the resulting bill may deepen worries around US fiscal sustainability. While most estimates of the House-passed bill suggest that the deficit-to-GDP ratio will remain unchanged at ~6.4% after 10 years, we view this legislative effort as confirmation that neither major US party has the appetite to fix structural debt issues. As it stands, the bill will likely have two primary effects: 1) it will be marginally stimulative for the economy, offsetting some of the tariff pain through domestic investment incentives, and 2) it will increase the need for Treasury issuance, putting further upward pressure on interest rates. In conjunction with the Moody's downgrade and rising global yields, potential for fiscal angst in the coming weeks keeps us underweight duration within our fixed income allocation. That said, we are actively evaluating at what higher levels in rates we can comfortably add back to duration as both an investment and as a hedge to equity risk.
Bottom line: With equities back to near all-time highs, investors are growing increasingly immune to tariff announcements – especially now that the courts are involved. With valuations stretched on still-uncertain fundamental estimates, coupled with rising bond market term premium, we remain cautious on adding new equity risk to portfolios.

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Another case of the “yips”?

26 May 2025

In late April, President Trump denied that an aggressive bond market sell-off influenced his decision to grant a 90-day pause on the reciprocal tariffs imposed by the US on April 2nd: “The bond market was getting the yips¹, but I wasn’t,” he stated. Fast forward to this past week, longer-term Treasury yields moved even higher than their April peaks, albeit at a slower pace. We view waning investor confidence in U.S. budget discipline, less investor appetite for U.S. assets from tariff backlash, and tariff-driven inflation as key factors in this recent back-up in yields, as bond investors feel another case of the “yips¹.” We are exploring ways to incorporate high quality non-US assets and other diversifiers in global portfolios.

We are closely monitoring the rise in yields globally, particularly in Japan. While we view this move as more Japan-specific as the Bank of Japan attempts to exit decades of yield curve management amid rising inflation, the decline in investor desire to own global government bonds traditionally used as a hedge is noticeable. On balance, we are debating the efficacy of U.S. and global bond duration as a hedge against equity risk and have leaned short duration of late. As the holder of over $1.1T in U.S. Treasuries per the latest TIC data (12% of total foreign ownership), Japan’s potential to sell foreign assets and buy its domestic government bonds at higher yields could exert further upward pressure on U.S. yields.
Consumer check-in: Consumers are still spending, but resilience is skewed towards staples (food, gas, streaming) with a clear slowdown in larger purchases. We see this dynamic in relative performance year-to-date, with Entertainment and Food & Beverage names up 10-20% while Autos, Consumer Durables and Airlines are down double digits. So far during Q1 earnings season, 36% of consumer names have cut or missed on full year guidance, while just 9% have raised. Retail and apparel names that pulled guidance completely saw their shares punished the most, including Ross Stores and Decker on Friday. Ahead of summer, earnings results from travel & leisure names have suggested consumers are booking shorter trips with more limited plans for dates further out. A weaker dollar has also dampened demand for international travel. We remain cautious on consumer-related equities as we do not view the full effects of tariffs as fully priced in.
Bottom line: We are keenly focused on several key areas of macro risk: the likelihood of trade-related disruptions in the coming months, the possibility of weakening consumer demand, rapidly rising interest rates globally, and stagflationary risks in the U.S. emerging in 2H25. The Citi Wealth Global Investment Committee met this week and left its tactical asset allocation unchanged, but we remain cautiously neutral on equities and shorter overall duration relative to our strategic benchmark as tariff uncertainty unfolds (see our May Asset Allocation(opens in a new tab)).

Read more in your Citi Mobile® App’s Digital Library*(opens in a new tab).

Equities rise amidst a tariff storm

19 May 2025

At the start of 2025, a 30% tariff on Chinese goods would have led to a widespread de-risking. However, market participants are treating this past weekend’s de-escalation from the 145% tariff on Chinese goods (effectively a trade embargo) as an all-clear on risk assets. The "progress" on trade talks likely indicates we are past peak tariff shock, but we think the market has been too fast to dismiss tariff pain. Businesses and consumers will need to share the burden of higher tariffs, and we expect both margin pressure and slower demand in 2H25. For example, Walmart noted on their earnings call this week a growing customer bias towards value and convenience, while also indicating that they may have to raise prices further from here in response to the tariffs. So, while we are encouraged by the trade discussions, we need to see more material progress to meaningfully lower tariff rates over the next 8-10 weeks to return our economic and earnings growth expectations to pre-tariff levels.

Equities have surged and volatility has plummeted on trade optimism – all while forward fundamentals remain deeply uncertain. We continue to believe that consensus U.S. EPS forecasts are likely too optimistic. With the S&P 500 trading at +22x forward estimates, we believe that the market is more than fairly priced. We have taken particular note that analysts forecast the majority (64%) of the 2025 S&P 500 EPS growth will once again come from Tech and Communication Services. Like in ‘23 and ‘24, AI-related growth may once again prove more durable than trade and consumer-sensitive segments. We wouldn’t bet against large U.S. corporations’ ability to navigate uncertainty, but we are biased towards styles such as earnings sustainability ahead of an uncertain 2H 2025.
The Fed remains paused until there is a meaningful economic slowdown: Encouragingly, the labor market remains stable, and the inflation data has improved. This week’s CPI data showed year-over-year headline inflation fall to 2.3%, the lowest monthly report since 2021. Even so, still-elevated core inflation and recent surveys indicating possible tariff-induced price increases ahead supports an on-hold Fed in the near term. Markets are now pricing about two rate cuts in 2025, down from a peak of four in early May. While the FOMC should continue to be patient in adjusting monetary policy given low visibility into the forward outlook, other global central banks have more freedom to ease, and we expect monetary policy divergence over the balance of 2025.
Bottom line: Despite the 23% rebound in equities from the April lows, we maintain our neutral positioning. We see fundamental catalysts - such as confidence in U.S. corporations' abilities to maintain and grow earnings above current estimates or additional fiscal stimulus strengthening consumer sentiment - as necessary for additional substantial upside from here beyond the recent technical drivers. In fixed income, we continue to prefer up-in-quality, short-to-intermediate duration bond exposure given tariff inflation risk and fiscal deficit-driven price pressure in longer-duration assets.

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China: Lower tariffs put recovery back on track

15 May 2025

Walking back from embargo-like tariff levels is welcome. Current tariff rates could allow the Chinese economy to meet the growth target. There remain hurdles to a more substantial trade deal, but any deal is likely to add further upside momentum for Chinese currency and equities.

China is the bigger trading partner for 148 countries globally. It had also prepared significant fiscal thrust to offset most of the impact from trade. As a result, even before the May 12 de-escalation, we believed that China’s massive fiscal impulse could offset most of the impact from trade.
A more substantial deal is possible but still face hurdles. We believe that any potential deal would involve some currency strength. As the CNY still lag most other currencies amid USD weakness this year, there remains significant room for CNY appreciation.

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Investors seek foreign ports during US trade storm

Trading the trade talks

13 May 2025

All eyes on Geneva this weekend. As of this writing on Friday morning, we are hours away from the start of trade talks between US and Chinese officials in Geneva. President Trump announced a trade deal yesterday with the UK, and the Administration has teased negotiations with 16 additional trading partners. In our view, the only way investors can reasonably justify current market pricing is to assume that broad tariff rates – and specifically US-China tariffs – will be dramatically reduced in the coming months. In the absence of a material climb down, we would expect markets to remain volatile as economic data is likely to start to deteriorate by the third quarter.

With the Fed worried about stagflation, policy is to “wait and see.” As expected, the Federal Open Market Committee (FOMC) held the Fed Funds rate at 4.5% this week. Chair Powell used the word “wait” over twenty times at the press conference, as the Fed is effectively caught in a cross-current of higher expected inflation due to tariffs and a potential growth slowdown. While other global central banks may have space for more aggressive policy easing this year, we continue to believe that the Fed will remain data dependent and current market pricing of 2-3 cuts in 2025 is reasonable..
A pause in earnings downgrades. The pace of downward earnings revisions has slowed over the past week, with analyst consensus still pointing to 7.6% growth in 2025. Many companies have delayed adjusting guidance for the year as the world awaits more tariff clarity. Notably, 64% of this year's earnings increase is expected to come from Tech and Communication Services alone. Spending on technology and AI-related investments will likely prove to be more resilient in a period of economic uncertainty. We expect earnings sustainability will be a winning theme in equity markets this year.
We are watching FX jitters closely. A sharp rally in the Taiwanese dollar earlier this week sparked another wave of “Sell America” worries. The Bloomberg Dollar index is nearly 7% weaker this year. Global asset allocators have been well-served owning US equities and bonds on an unhedged basis over the past two decades, but we may continue to see repatriation flows and shifts to hedge outsized US dollar exposures over time. That said, while tariffs and portfolio rebalancing have contributed to bouts of US asset sales, we prefer to hold up-in-quality risk assets, which favors US equities.

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Waiting Game

05 May 2025

Soft data remains poor, but hard data has yet to turn: Although the "soft data" of various economic surveys continues to indicate deteriorating corporate and consumer confidence, actual “hard data” economic releases have not yet demonstrated any meaningful decline in activity as exemplified by today’s relatively strong payrolls report (+177,000 jobs). Accordingly, market participants are forced to price scenarios around when and if this transmission from weak sentiment to weak economy will occur.

The Fed won’t come to the rescue any time soon: With the unemployment rate steady at 4.2% in April, the Fed is highly unlikely to provide any sense of future rate cut timing at its meeting next week. While rate cuts will likely be appropriate later in 2025 if the hard data confirms economic weakness, we caution investors against banking on a large amount of policy easing against a backdrop of sticky inflation and an uncertain US fiscal outlook.
Equity positioning looks cleaner. Markets remain susceptible to near-term good news rallies: US equity index levels have roundtripped over the last month – since the April 2nd tariff announcements, even though effective tariff rates are dramatically higher than they were a month ago and the forward outlook for growth has deteriorated. After peaking north of 50, the VIX has fallen to 22 as investors bet that the worst tariff news may be behind us. More recently, comments from both the US and Chinese officials hinting at de-escalation of trade tensions combined with encouraging tech capex guidance has helped spark a re-risking. That said, we believe the US equity market is at the top end of the range justified by fundamentals and a full retracement to February highs is highly unlikely.
While earnings revisions have been swift, estimates still look too high: Earnings revisions are unequivocally negative. Over the past month, revision ratios (upgrades relative to downgrades) were in the 6th percentile of observations since 1986. Normally, when we observe extreme negativity in markets, we think of this as an opportunity to take advantage of others’ fear. But it’s not clear to us that we’ve reached peak negativity. While the pace of downward revisions has been swift, the magnitude of the revisions remains muted and bottom-up EPS estimates still point to 8% growth for 2025. Barring a rekindling of animal spirits and a decisive resolution to trade tensions, we expect further downward revisions.
Our guidance to clients: We do not have nearly enough ingredients to issue an “all clear “on risk assets, as significant downside risks to growth and policy remain. As such, we are maintaining our call for our clients: “Now is not the time to add to risk.” Further guidance may be found in our GIC Asset Allocation (opens in a new tab)statement released yesterday.

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Tired of tariff tantrums, market shifts focus to earnings

28 Apr 2025

Although "soft data" continues to indicate deteriorating corporate and consumer confidence, recent “hard data” has not yet demonstrated any meaningful decline in activity. The timing and magnitude of the transmission between soft data and hard data is difficult to predict, especially given that the new tariff regime isn’t close to being finalized. Encouragingly, the labor market remains stable, and consumers and businesses alike have brought forward spending this month in anticipation of rising prices. As tariff costs start to weigh heavily on goods supply in coming months, spending activity will likely retrench somewhat in the face of these new taxes.

As we noted last week, against a backdrop of lower policy visibility, many investors have been actively reducing their significant overweight to US assets over the last few months, resulting in USD weakness. While the US economy remains resilient by global standards, the convergence of slower growth, policy uncertainty, and trade wars is forcing global allocators to examine the size of US allocations in diversified portfolios. Given that tariffs are unlikely to be fully resolved for the foreseeable future, we expect weakness in the USD to continue even if US equity and fixed income market volatility continues to stabilize.
Market participants are clearly hopeful that weakening data will spur the Fed to engage in policy easing by the start of the summer. While rate cuts will likely be appropriate in 2025, we caution investors against banking on a large amount of policy easing against a backdrop of sticky inflation and a deeply uncertain growth outlook. We believe policymakers will ground their decisions on hard economic data and will resist rushing to action.
Equities continue to be whipsawed by headlines and promises, with a flurry of conflicting statements and leaks coming out of the White House. The strong price action in equities following White House comments hinting at (1) de-escalation of trade tensions with China, and (2) fewer challenges to Fed independence, illustrated how desperate market participants have been for any shred of good news. While measures of volatility are meaningfully lower than the peak in early April following the tariff announcements, average volatility in 2025 is still more than 60% higher than in 2024 and we are far from an all-clear. Even with several days of euphoric moves over the last week, the fundamental outlook for equities continues to weaken and earnings revisions have moved sharply lower this month.

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Investors seek foreign ports during US trade storm

21 Apr 2025

Despite some initial positive headlines around tariff negotiations with Japan, tariff risks – particularly sectoral – are increasing: Sectoral tariff reviews for pharma/semis and reciprocal tariff negotiations are only now getting underway. Many of the countries facing high tariffs don’t have the resources of Japan or the EU to commit to buying more US energy or goods. Moreover, while ostensibly remaining open to talks, for now the Trump Administration appears to be trying to isolate China, publicly stating that reciprocal tariff rates negotiated with other nations might be influenced by those countries’ willingness to curb their own trade flows with China.

Monetary policy is still not coming to the rescue: Chairman Powell noted that it is “too soon to say” when asked for the Fed’s assessment of the impact of trade policy. Critically, there is no real precedent for the current proposed tariff regime. Powell will respect both sides of the dual mandate, but for now is primarily focused on inflation, which lessens the chance of any near-term rate cuts.
Cross asset volatility has spiked in 2025: While US Treasury volatility subsided somewhat during the week (as discussed further below), US equities closed lower. Gold jumped another 3% in the week, continuing a remarkable 26% YTD gain. Major foreign currencies such as the Euro and Yen also continued their YTD appreciation vs the USD, accelerating higher since “Liberation Day” (April 2nd) (see FIGURE 1). It’s likely that investors are reallocating a portion of their US investments abroad due primarily to weaker US equity market return expectations. But these flows may also be in part anticipating that sharply reduced expected global net trade flows into the US will result in smaller capital flows to “recycle” back into the US. Non-US equities have also outperformed US counterparts (see FIGURE 2), as have German sovereign bonds (Bunds) relative to US Treasuries.
Our view: We expect market volatility to remain high, and headline driven. We do not expect a rapid de-escalation of the tariff negotiations, so corporate earnings visibility will remain very low. Equity positioning and technicals could lead to dramatic market swings, but we are remaining focused on fundamentals – and both the forward earnings and macro growth outlooks are deteriorating. Given that risks remain for the Treasury yield curve to steepen, we continue to favor short to intermediate bonds.

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How Well Can the U.S. Absorb the Tariff Shock

Increasing economic uncertainty leads to decreasing investor risk appetite

14 Apr 2025

In a week characterized by historically sharp equity selloffs and a brief, but historic, rally, “safe haven” assets failed to provide portfolio ballast. The yields on long-duration Treasuries moved sharply higher while the USD weakened against global currencies. Investors sent a clear signal that given increasing levels of economic uncertainty they would prefer to reduce their level of risk.

The root cause of this uncertainty was the US following through with its pledge to impose extremely high individualized “reciprocal’ tariff rates the morning of April 9th on imports from the rest of the world, and then that very same afternoon surprising markets by revising down the tariff rates for all countries (except China) to 10% for 90 days (sectoral tariffs on steel, aluminum, autos, and non-USMCA goods from Canada/Mexico were not revised lower, however).
Even as the US signaled a willingness to engage in negotiations with some countries, the trade tension between the US and its third largest trading partner, China, reached a fever pitch. As of this writing, and after several retaliations on each side, Chinese exports to the US face a tariff rate of 145%, while China’s tariff rate on US imports is 125%.
Policy-induced market volatility remains extremely elevated as investors turn their attention to 1Q25 earnings. Several big banks and financial institutions that reported early on Friday cautioned that activity is likely to slow amid ongoing trade and economic “turbulence.” We will continue to monitor changes in corporate guidance and noted that several consumer bellwethers including Delta Airlines and Walmart pulled guidance earlier in the week. Citi believes that current EPS estimates (~+10% on-year) for FY2025 are improbable.

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CHF – A Funding Currency Or A Safe Haven?

USD – Gathering Multiple Headwinds

05 Jun 2025

Latest news of the US court’s decision was initially viewed as a risk positive for the USD. However, medium-term headwinds for the dollar continue to multiply and persist, causing medium-term sentiment to turn increasingly bearish.

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Trading the trade talks

22 May 2025

The tariff pause announced on May 12th lowers the effective tariff rate on China back to non-prohibitive days at between 38% - 45%. This significantly narrows the tariff rate differentials between China and other trade partners. Theoretically, this incentivizes the CNY to weaken but markets have reasons to expect that China may allow its currency to strengthen as a quid pro quo to any formal US – China trade deal.

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CHF – A Funding Currency Or A Safe Haven?

08 May 2025

CHF is typically favored as a currency to fund purchases of risk assets with the lowest central bank rates within the G10 currencies. However, in times of global crisis, CHF wears another hat as one of the safe haven currencies. In this article, we explore why being a safe haven strengthens the currency and weakens its prospects as a funding currency.

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DXY- Disorderly Decline In USD Not In Anyone's Interest

24 April 2025

While President Trump wants to see a weaker dollar, a disorderly decline is probably not what he had in mind given his stated objective of preserving dollar’s status as the world’s reserve currency. In this edition, our Head of Global Foreign Exchange Investment Strategy, Jaideep Tiwari examines the weakening of the US dollar and the factors which led to the loss of confidence in USD’s safe haven appeal.

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