Markets Edition: Back to School – Navigating September Macro Headwinds
KEY TAKEAWAYS
- The macro outlook for U.S. equities remains positive despite a soft labor market and potential volatility. Key risks include FOMC reconstitution, which could benefit gold, and lagged inflationary impacts from existing tariffs.
- Strategic positioning remains overweight U.S. equities. Unusually dovish Fed pricing suggests opportunities in U.S. curve steepeners and a weaker dollar, while FOMC reconstitution risk reinforces a positive narrative for gold.
- Near-term focus is on September market volatility and the emerging inflationary impact from tariffs. Longer-term, the FOMC reconstitution by February presents a key risk, with the market already pricing in dovishness.
In this Research @ Citi Markets Edition, global macro strategists Dirk Willer and Adam Pickett examine three topics: the state of the U.S. economy and equity markets, the outlook for the FOMC roster and its impact on rates and FX, and the debates around tariffs — their legality and potential lagged inflationary impact.
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Dirk Willer, Global Head of Macro Strategy and Asset Allocation, Citi
Dirk Willer is a Managing Director and Global Head of Macro Strategy and Asset Allocation. In this role, Dirk develops broad macro themes, related asset allocation views as well as trade ideas across a wide range of asset classes and geographies. Dirk also directs the Quant Macro Team. Prior to that, Dirk was the Global Head of Emerging Market Fixed Income and FX Strategy. He joined the firm in 2005 as the head of LatAm Local Market Strategy. Previously, Dirk worked at Omega Advisors and RHG Capital as their global macro strategist and portfolio manager. Dirk and his team have been ranked as the first team in the Institutional Investor survey for LatAm local strategy and the first or second team for LatAm sovereign credit strategy since 2017, as well as first in CEEMEA and Asia local strategy in 2019. Dirk is the lead author of “Trading Fixed Income and FX in Emerging Markets”, published by Wiley in 2020. Dirk holds a PhD and MSc in Economics from the London School of Economics. He did his undergraduate work at the University of St. Gallen in Switzerland.
Adam Pickett, Head of Global Macro Strategy Team, Citi
Adam Pickett is a Head of Citi’s Global Macro Strategy team, based in London; he also works within the Asset Allocation group. Adam and team focus on broad macro themes, cross-asset class analysis, house FX forecasts, and global asset allocation. He offers trade ideas aimed at hedge funds, real money, and other macro-oriented investors. Specifically, he covers FX, fixed income, equity, credit, and commodity markets. Prior to joining the Global Macro Strategy team, Adam spearheaded Citi’s EMEA G10 FX Strategy effort, based in London, for four years, primarily focusing on generating alpha via leveraged trade ideas.
