A Surprising September

Monthly Market Snapshot: September 2018


It is likely no surprise that U.S. and Chinese trade relations remain strained. However, the outperformance of U.S. equity markets in the face of rising tariffs may have surprised some investors. During the third quarter, U.S. equities pushed powerfully higher with the S&P 500 returning 7.2% - the best quarterly gain since late 2013. Excluding the U.S., global equities were flat. However, the fourth quarter tends to be a positive one for risk assets. We would not be surprised to see global equities (particularly non-U.S.) rebound during this period.

Global growth remains strong across the board, but the U.S. has been exceptionally strong. Citi’s economists expect global real gross domestic product (GDP) to expand by about 3.3% in both 2018 and 2019. We expect global growth to slow heading into 2020, but remain fairly positive overall.

Citi Private Bank’s Global Investment Committee (GIC) remains modestly overweight global equities and slightly underweight global fixed income. Preferred equity market regions include Germany, France, and emerging markets (particularly Asia). On the fixed income side, the GIC prefers short-term U.S. debt and inflation-linked debt. Underweights include most European and Japanese sovereign bonds.