Asset managers are more and more shopping for gold and the U.S. greenback, Citi stated in a report on Thursday.
The report analyzed the asset supervisor’s $18.6 trillion property underneath administration (AUM) place, highlighting that gold and greenback longs “are essentially the most consensus trades.”
Within the broader context, sentiment on European equities has worsened considerably, turning from optimistic to damaging, though Citi famous a basic desire for equities. In fastened earnings, managers have typically diminished length bets and most credit score positions, except for European investment-grade credit score.
Sentiment within the commodity market has diverged, with individuals displaying a transparent desire for treasured metals over power and primary commodities. Gold, specifically, grew to become the preferred commodity.
Citi emphasised: “It is all about gold, which is the clearest consensus commerce.”
On the foreign money entrance, the US greenback is rising as one other robust consensus commerce. Asset managers have tempered their enthusiasm for the yen, whereas damaging sentiment on the euro and sterling has additionally subsided. Nonetheless, perception in a stronger greenback stays robust.
“Valuable metals and the U.S. greenback now have the very best directional conviction,” the report stated.
This positioning is according to a broader technique to de-risk and put together for potential shifts in financial coverage, significantly within the context of a possible rate-cutting cycle by the Federal Reserve.
Federal Reserve Chairman Jerome Powell laid the groundwork for doable future rate of interest cuts throughout a speech in Jackson Gap final week, however he didn’t specify the timing or magnitude of the cuts.
The general path ahead is evident, with the timing and measurement of any fee cuts prone to be affected by incoming information, the altering financial outlook and related threat assessments.
