Citi Analysts Unveil Trump Trades Amid Fed Uncertainty
In a recent note, Citi analysts have identified key strategic trades, known as "Trump trades," that are poised to benefit from potential market movements influenced by a Trump presidency and upcoming Federal Reserve actions. However, most of these trades may need to wait until after the Fed's next move.
One exception highlighted by Citi is the attractiveness of steepeners, which could see gains from a dovish Fed and election-related shifts. With an expected rate cut in September, positioning for the outperformance of US equities over European equities could be advantageous.
Despite the potential opportunities, Citi advises caution, particularly when it comes to French equities, which have not seen the same rebound as other French assets post-election. The analysts also take a bearish stance on oil, forecasting downside by late 2025 due to expectations of a Trump presidency and related factors.
On the currency front, Citi has adjusted its positions, closing a long trade and adding a new one that benefits from weakening US growth. This move is supported by favorable trade terms, central bank actions, and anticipated positive outcomes from the Chinese third plenum.
Overall, Citi's analysts anticipate significant market movements driven by Federal Reserve actions and potential political developments. By tailoring specific strategies to navigate these changes, investors can position themselves for success in the evolving financial landscape.