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2025 Wealth Outlook
Weekly Market Analysis
Wealth Insights

Credit at the Core

14 Feb 2025

In this year’s Wealth Outlook, the Chief Investment Office is once again highlighting the importance of bonds in a portfolio. Bonds provide core income within a portfolio, and in balanced portfolios, there is a case for allocation in select US High Yield corporate bonds and senior secured bank loans. But at the core, our preference remains quality, diversified intermediate-duration corporate fixed income.

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

Shifting Equities Leadership

21 Jan 2025

For the past 15 years, U.S. equities has led global equity markets. But a key message from our Wealth Outlook 2025 is to broaden investment horizons and avoid building a portfolio solely dependent on S&P 500 returns going forward.

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Staying the Course: Broadening Portfolio Horizons

12 Dec 2024

Staying the course is essential in most aspects of life, from business and careers to relationships to education to sports. We believe it also matters deeply in investing. Historically, those who have stayed the course with a core portfolio – a globally diversified mix of assets that is fully invested throughout market cycles – have been likelier to reach their wealth goals than those who have not.

As we enter 2025, we reiterate our case for staying the course in core portfolios. However, this does not mean standing still, as past performance may not be repeated going forward.

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

Hitting the Tariff Button

18 Mar 2025

In our weekly market analysis, we bring to you three key observation we made.

Market Reaction Has Not Slowed Tariff Announcements
A 10% drop in US equities has not dissuaded President Trump from announcing escalating tariffs on particular imports from Canada, the EU and others. However, with US equities dropping 0.7% on average per day since peaking on February 19, we suspect that a near-term peak in trade policy uncertainty will be reached by the President’s deadline for a “reciprocal tariff” announcement on April 2.

April Deadline May Not End Uncertainty
While complex to measure, we expect reciprocal tariffs to be significantly smaller in absolute size than the 10%-25% tariff increases across a range of North American and Chinese imports. This does not prevent future rounds of tariff uncertainty or “trade wars” from recurring.

U.S. Economy Likely to Weaken in the Coming Quarters
Even in a hypothetical “best case” in which US tariffs are dropped as foreign tariffs decline in negotiations, the rise in trade uncertainty is likely to result in a net weakening of the US economy in the next couple of quarters as production and investment slow. With this said, the drop may not be as severe as peak market fears to come. As an example, in 1Q to date, US small business confidence has fallen less than 5%, pointing to a moderate slowdown.

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The U.S. Economy Slows in Q1 2025

11 Mar 2025

In our weekly market analysis, we bring to you three key observation we made.

Early U.S. Data is Worrying
Data that comprise US GDP for the first quarter are limited to the very early year but have turned decisively negative. We see some temporary elements, but also some worrying signs. New tariffs only began this month and may be delayed further. Yet, US imports– and the trade deficit – have been surging since November, with a particularly large leap in January, negatively impacting 1Q US GDP estimates. This is an attempt to pull in materials and goods ahead of tariff collections. These increases could reverse by 2Q 2025.

Tariffs Likely to Have More Impact Compared to 2018
Inflation spiked in January for a fourth year. It appears “turn of the year” impact may be at work, with inflation likely slowing in February. However, as the exact size and scope of coming US tariffs is unknown, and since the tariff threats are so much larger than in 2018, we should expect greater impact on consumer prices by 2Q 2025.

Growth and Inflation to Face Pressure
Tariffs paid for by importers won’t make US wallets any larger. US employment growth is positive but slowing. If this reverses with domestic investment and production rising in time, the tariff costs will be mitigated. Until then, the “growth/inflation mix” will face unfavorable pressures (real consumer spending posted the largest monthly drop since February of 2021).

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

Move Fast, Break Things

5 Mar 2025

In our weekly market analysis, we bring to you three key observation we made.

White House Policies Leave US Equities in a Grey Area
The bold moves by President Trump and the new administration could prove a hindrance to global U.S. corporations that have long relied on global markets for growth, expansion and sourcing. Will the world be persuaded to make room for a larger U.S. share of manufactured goods exports with tariff threats bargained away for a host of aims? The range of possibilities suggests a bit more caution in portfolios for US equities, which is why the Global Investment Committee has decided to take some risk off and reduce our US equity weighting.

Tariffs Hitting Consumer and Business Confidence
While the tariff impact has yet to hit American consumers, and there remains a host of outstanding issues, the fears over how it will eventually impact the US economy is already showing. Long-term US consumer inflation expectations, as reflected by the University of Michigan consumer sentiment index, rose to a 22-year high this month while the small business optimism index has also likely peaked.

DeepSeek to Drive AI Adoption at Scale
DeepSeek’s breakthrough isn’t about geopolitics or comparing chips. It allows for lower barriers to entry, broader and quicker adoption of AI at scale, and is likely to support the earnings of leading semiconductors this year. AI is also likely going to help Chinese equities, which is already outperforming most other markets in 2025, and place it back on investors’ radars.

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

When the World Divides

18 Feb 2025

In our weekly market analysis, we bring to you three key observation we made.

Tariffs are Unlikely to Impact the U.S. Budget Deficit
In recent months we have attempted to tally the impact of US tariff threats and also assess how much may potentially be imposed in reality. We discussed how tariff retaliation may be an unintended consequence that has a larger impact on asset values than on trade imbalances. We believe Trump is negotiating all tariffs, but his “fall back” is to raise tax revenue that might offset other domestic taxes. The math is difficult. Even if actual US import duties double, they would cover less than one-tenth of the US budget deficit.

Tax Extensions Will Not Be Covered by Tariff Measures
“Reciprocal tariffs” – tariffs equal to those imposed by US trading partners – would raise around one-third of the amount of federal revenue that would be raised if US federal income taxes rise (in line with current budget law in 2026) and would still leave a US$1.7 trillion budget deficit. In other words, even the massive tariff increases Trump has announced would have to be much larger to pay for extensions of US tax rates.

Consumers Are Likely to Bear the Brunt of Tit-for-Tat Tariffs
Who “pays” for US tariffs? It’s not as simple as who pays the actual duty. Rather, it’s “paid” for by consumers who have to shift their consumption patterns, exporters who cannot compete in international markets, and those who explicitly pay higher prices for the duty items. This change of spending patterns can be seen throughout the world, limiting collections.

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

Keeping Our Balance Amid Upheaval

11 Feb 2025

In our weekly market analysis, we bring to you three key observation we made.

Portfolio Diversification and Prudent Risk Management are Keys to Navigating Volatility
Territorial claims. Tariffs. Government makeovers. What is the new US administration really up to? While we remain optimistic U.S. growth and profits will rise in 2025 and 2026, any new approach to trade – with both allies and rivals – brings increased risk to the table. President Trump’s extreme high risk/high reward approach makes a more volatile market background likely. While our base case economic outlook still anticipates solid EPS gains across most of the world through next year, we believe some risks to the US and world economy have risen. Recent market turbulence reflects this, and we are confident that clients should remain diversified and are prudent in how they manage portfolio risk this year.

Tariff Threats: Globally Reliant U.S. Firms May Get the Short Stick
As discussed in the Bulletin, U.S. firms drive significant profits from access to global supplies and external demand, leaving U.S. equity markets at greater risk than trade data implies. International supply chains are a vulnerability for firm profits and the economy if “trade wars” escalate. With this in mind, and strong gains in U.S. large cap equities during the past two years, our Strategic Asset Allocation process has elevated U.S. High-Yield debt as a portfolio consideration. We would expect significantly less absolute volatility from credit market holdings.

Is Gold Destined to Shine?
Macro risks and a return to Fed easing at some point aid gold (see chart). For the past 50 years, the correlation of gold to equity and bond returns over 12 months has been -12%. If there was a negative economic shock that was inflationary in nature, gold would very likely outperform. While we have not adjusted tactical portfolio allocations that target 12–18-month periods, we’ve added exposure to gold-linked assets to our list of potential opportunities for near-term, off-benchmark returns.

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

How Long Can the Trump Trade Last?

18 Nov 2024

Trump’s victory, with a likely Republican sweep of the Senate and House, has led to aggressive pricing of higher inflation expectations, fewer rate cuts, stronger USD, higher US and Japanese equities and weaker emerging market (EM) equities.There may be further upside in yields and USD in the coming months, but the scale and timing are uncertain. Even with control of Congress, tax cuts and even tariffs may take time to be implemented, with uncertain impact since both are highly anticipated.

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

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Citi Wealth Insights

Stay updated on key global market developments and Citi's house views on the latest headlines

Private Assets – A Complement to Core Portfolios

14 Mar 2025

Credit at the Core

14 Feb 2025