Markets Edition: Deal or No Deal - The Market Consequences of a De-Escalation
KEY TAKEAWAYS
- A potential de-escalation in the Middle East could trigger an oil-price sell-off, creating a positive environment for fixed income as inflation concerns ease and rates unwind from recent peaks.
- The global macro strategy favors countries with below-target inflation, which are expected to see stronger rate rallies. The U.S. dollar is likely to remain resilient due to underlying economic factors and relative equity strength.
- Despite a generally positive equities outlook post-deal, tactical caution is warranted due to signs of market exuberance. Investors should monitor for a potential near-term bounce in equity markets following a resolution.
Alex Saunders, Citi’s Head of Quant Macro Strategy, joins Adam Pickett, Head of Global Macro Strategy, to discuss investment strategies in the event of a de-escalation in Middle East tensions. They consider factors from inflation in different countries to the potential impact on the dollar.
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Alex Saunders, Head of Quant Macro Research
Alex Saunders is a Director with Citi Research and heads the Quantitative Global Macro and Asset Allocation team. Prior to joining Citi in 2021 he spent more than 15 years on the buy side as a researcher and portfolio manager for quantitative investment strategies. His most recent position covered asset allocation and US credit for Itau Asset Management. Before that, he worked for QS Investors and Deutsche Asset Management across a variety of asset classes.
Adam Pickett, Head of Global Macro Strategy
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.
