🤑 It doesn’t get more affordable. Grab this 60% OFF Black Friday offer before it disappears…CLAIM SALE

Citi is taking profits on Trump trades. Here's why

Published 01/11/2024, 13:08
© Reuters.
US500
-

Investing.com -- Citi analysts are taking profits on their Trump-related trades as the market shows signs of having partially priced in a Trump victory.

According to Citi, “the risk-reward has deteriorated,” leading the firm to unwind some of its positions. This includes removing a long position on U.S. banks relative to the equal-weighted S&P 500 and implementing a “position unwind basket in EMFX going into the election.”

Citi attributes October’s strong performance of Trump trades to favorable macro conditions but expresses concerns over diminishing upside.

“Trump trades had a very strong October,” the analysts note, but they now see reduced potential gains, prompting them to gradually take profits.

The firm’s cautious approach reflects its broader strategy, as Citi suspects many clients are similarly reducing risk ahead of the election.

Looking ahead, Citi believes post-election momentum could drive markets higher. Their research shows that “chasing price action after elections tends to work,” especially for the S&P 500 and DXY (U.S. Dollar Index).

Citi anticipates that “the SPX should benefit post-election from falling volatility” and better year-end seasonals, signaling potential opportunities once the election is behind.

While most attention remains on U.S. markets, Citi has also taken a more cautious stance in the UK following an unexpectedly hawkish budget.

With less expansionary fiscal policy than anticipated, Citi has exited its SOFR/SONIA trade, stating, “Markets were unpleasantly surprised with a very expansionary budget.”

Overall, Citi is holding back on riskier bets as election day nears, while remaining optimistic about the potential for a year-end rally.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2024 - Fusion Media Limited. All Rights Reserved.