‘The Real Fed Put’: Citi Bullish on Equities on Expectations Real Rates Will Stay Negative in 2022
2022.04.01 17:22
‘The Real Fed Put’: Citi Bullish on Equities on Expectations Real Rates Will Stay Negative in 2022
Citi (NYSE:C) strategist Robert Buckland believes global equities will continue to find buyers despite geopolitical conflicts, GDP cuts, earnings revisions, high inflation, and monetary tightening.
This view is based on the expectations that US real rates will stay negative this year before potentially moving higher in 2023.
The strategist says equities faced so much bad news, but still, the MSCI AC World is 6% above its pre-conflict level while the S&P 500 is 9% in the green.
With cash and bonds offering negative real yields, investors are still inclined to buy the dips in global equities, despite deteriorating fundamentals. Citi economists expect US real yields to go positive in 2023, which may prove more challenging. Growth trades, such as US equities and the MSCI World IT sector, will likely stay expensive as real rates remain negative. They may be vulnerable to higher real rates next year.
By Senad Karaahmetovic
