• Open an Account
  • ATM / Branch
Citi logo Citi logo
  • Overview
  • Market Commentary
  • Financial Planning
  • Global Perspectives
  • Wharton Knowledge
  • Election 2020
  • Call Financial Advisor: 9am–7pm ET (M–F)
    1-877-357-3399
  • TTY: 1-800-788-6775
  • Sign on to Schedule Appointment
    • Sign On to Citi Personal Wealth Management
    • Banking
    • Credit Cards
    • Investing
    • Lending
    • Citigold®
    • Citigold® Private Client

Citi Personal Wealth Management

An Anxious August

Monthly Market Snapshot: August 2019

Highlights

Stocks fell across most regions in August as investors grew increasingly anxious over slowing global growth and the ongoing U.S. – China trade war. In the United States, the S&P 500 was at one point 4.7% lower in the month, but it rallied back to close the month at just 1.8% lower (year-to-date gains are still 16.7%). In Europe, worries about Germany’s economy and concerns about the upcoming October 31 Brexit deadline led to a 2.2% decline in equities. Emerging markets continued to underperform – falling by 5.1%.

An inverted yield curve (when the two-year U.S. Treasury yield is higher than the 10-year U.S. Treasury yield) is one of the best indicators of an oncoming U.S. recession. However, the timing of the next recession can vary widely. While the odds of a recession are rising, one does not yet appear imminent. There may still be time for policymakers to make decisions that can help to avoid (or delay) a U.S. recession.

Citi’s Private Bank’s Global Investment Committee (GIC) maintains a slight underweight on global stocks. After a sharp drop in international bond yields, the GIC decided to reduce its global fixed income overweight of 1.5% to neutral. Those proceeds were used to initiate a 1.5% overweight on gold.

Shawn Snyder
Shawn Snyder Citi Personal Wealth Management,
Head of Investment Strategy

Regional Outlook

United States

Outline of the United States

Economy (Slowing)

With the U.S. manufacturing sector looking like it may be in recession, the outlook for growth is becoming increasingly dependent on the U.S. consumer. Fortunately, the consumer remains strong with real consumer spending climbing by 4.7% in the second quarter. Overall, some leading economic indicators are signaling caution, but a U.S. recession does not yet appear imminent.

Stocks (Underweight)

Citi Private Bank’s Global Investment Committee remains underweight U.S. large-cap stocks. We think that stocks can move higher in the face of growth concerns, but the lack of clarity on trade policy is keeping us cautious. A more definitive path forward from both the Fed and the U.S. Administration may be needed to move noticeably higher from here. Citi’s mid-year 2020 S&P 500 target remains 3,000.

Bonds (Overweight)

Another rate cut from the Fed is widely expected, but the extent of easing remains a bit of a mystery. Will the July rate cut prove to be a “mid-cycle adjustment” meant to simply unwind the December rate hike or does it mark the start of a new easing cycle? For now, the GIC remains overweight cash, short-, intermediate-, and long-duration U.S. Treasuries as most yields are still gliding lower.

Europe and Japan

Outline of Europe

Economy (Slowing)

Germany’s economy shrank during the April-to-June period of this year – receding by 0.1% from the previous quarter. If the slowdown deepens further, we think that the odds of European officials moving towards either fiscal or monetary stimulus will rise. At this stage, Citi’s economists are maintaining their GDP forecasts for the region – expecting growth of 1.0% and 1.2% in 2019 and 2020, respectively. In Japan, economic activity appears to be picking up a bit with Citi’s proprietary economic surprise index showing a noticeable turnaround in data since June. This is consistent with Citi’s economists’ decision in July to lift their forecasts for 2019 growth by 0.2% to 0.8%.

Stocks (Europe: Neutral / Japan: Slight Underweight)

The GIC maintains a neutral stance on European (ex-UK) stocks. Even though valuations look reasonable when compared to U.S. equities, European exporters appear exposed to the ongoing trade tensions and Brexit remains a viable risk in the second half of this year. In Japan, there may be opportunities in certain sectors like robotics and automation, but selectivity is key.

Bonds (Underweight)

A renewal of stimulus measures in Europe may be forthcoming with the European Central Bank widely expected to cut interest rates at their September 12 meeting. However, we still see the yields on most European and Japanese sovereign bonds as unacceptable.

Emerging Markets

Outline of China, indicating Emerging Markets

Economy (Slowing)

Emerging market economies are expected to slow from 4.5% in 2018 to 4.2% in 2019. Renewed trade tensions are still weighing on emerging market economic prospects. While some regions (Vietnam, Korea and Taiwan) may benefit from a shift in supply chains, the further ratcheting up of tariffs on Chinese goods is likely adding to instability as China’s economy continues to slow.

Stocks (Slight Overweight)

The GIC remains slightly overweight emerging market equities (particularly South Asia). However, we see this overweight as a longer-term investment decision. In the near-term, renewed U.S. – China trade tensions, a stronger U.S. dollar, and geopolitics may continue to dampen returns. We believe investors should focus on long-term trends like healthcare.

Bonds (Slightly Overweight)

We are overweight emerging market fixed income – specifically in emerging Asia and Latin America.

U.S. Stock Market and Economic Forecasts

Figure 1: U.S. Stock Market and Economic Forecasts
Indicator 2018A 2019F 2020F
S&P 500 Target 2,507 2,850 Mid-Year: 3,000
S&P 500 P/E Ratio 15.43x 17.60x 16.78x
S&P 500 EPS Growth 22.5% 2.0% 4.8%
GDP 2.9% 2.6% 2.0%
Inflation 2.0% 1.7% 1.9%
Unemployment Rate 3.9% 3.7% 3.5%
This table shows Citi's U.S. stock market and economic forecasts. Indicators include year-end targets for the S&P 500, Price-to-Earnings ratios, Earnings-Per-Share growth rates, gross domestic product, inflation, and the unemployment rate.
Sources: Citi Research and Citi Personal Wealth Management as of August 31, 2019. Note: The S&P 500 P/E ratio is based on trailing four-quarter S&P 500 operating earnings-per-share. There can be no assurance that these projections will be met. Actual results may differ materially from the forecasts/estimates. The above table reflects the views of Citi Investment Research and Analysis (CIRA). CIRA forecasts take into consideration underlying economic, demographic, political, and psychological forces that drive market behavior. CIRA looks for trends and markets that offer potential as long-term investment ideas. You should carefully consider investment objectives, risks, charges, and expenses before investing.

Global Economic Forecasts

Figure 2: Global Economic Forecasts
Region GDP Growth CPI Inflation 10-Year Yields Exchange Rate vs. USD
2019F 2020F 2021F 2019F 2020F 2021F 2019F 2020F 2021F 2019F 2020F 2021F
Global 2.8 2.8 2.9 2.5 2.5 2.4 N/A N/A N/A N/A N/A N/A
Based on PPP Weights 3.3 3.5 3.8 3.1 3.1 3.1 N/A N/A N/A N/A N/A N/A
Industrial Countries 1.8 1.5 1.6 1.4 1.6 1.7 N/A N/A N/A N/A N/A N/A
United States 2.6 2.0 1.8 1.7 1.9 2.0 2.15 2.15 2.15 N/A N/A N/A
Euro Area 1.0 1.2 1.6 1.3 1.4 1.6 -0.04 0.23 0.72 1.13 1.20 1.30
Japan 0.8 0.1 0.5 0.5 0.6 0.8 -0.10 0.13 0.20 108 101 93
Emerging Markets 4.2 4.5 4.6 3.8 3.6 3.4 N/A N/A N/A N/A N/A N/A
China 6.3 6.0 5.8 2.4 2.0 2.0 3.00 2.95 2.95 6.84 6.70 6.27
❮ Swipe left for more
This table shows Citi's forecasts for gross domestic product, consumer prices, 10-year sovereign bond yields, and exchange rates versus the U.S. dollar across various regions.

Market Indicators

Figure 3: Equity Markets
  Equity Returns (%) Valuations Div. Yld. (%)
Equities Level 2014 2015 2016 2017 2018 MTD QTD YTD P/E 12-Month
Forward P/E		 Current
Global 511 2.1 -4.3 5.6 21.6 -11.2 -2.6 -2.4 12.1 17.4 15.8 2.6
S&P 500 2980 11.4 -0.7 9.5 19.4 -6.2 -1.8 -0.5 16.7 19.0 17.5 2.0
DJIA 26864 7.5 -2.2 13.4 25.1 -5.6 -1.7 -0.7 13.2 17.4 17.1 2.3
NASDAQ 8175 13.4 5.7 7.5 28.2 -3.9 -2.6 -0.5 20.0 30.7 23.8 1.1
Europe 2883 1.2 3.9 0.7 21.2 -18.5 -2.2 -4.6 10.0 17.4 14.1 3.6
Japan 3132 7.1 9.1 0.4 21.8 -14.5 -1.0 -0.9 5.6 13.2 12.5 2.6
Emerging Markets 1037 -4.6 -17.0 8.6 34.3 -16.6 -5.1 -6.7 1.9 13.2 12.9 3.0
❮ Swipe left for more
This table shows returns for various equity markets, including returns from the previous 5 years and current year period-to-date returns. It also shows current valuations for these markets.
Note: Global = MSCI All Country World Index (USD); Europe = Euro Stoxx 50 Price Index (USD); Japan = MSCI Japan (USD); Emerging Markets = MSCI Emerging Markets (USD). Most equity index returns shown here are based on a U.S. dollar basis. International returns for a U.S.-based investor can differ significantly depending on the effects of foreign currency exchange.
Figure 4: Fixed Income Markets
  Fixed Income Returns (%) Other Key Rates
Fixed Income YTM 2014 2015 2016 2017 2018 MTD QTD YTD Instrument Current (%)
Global 1.18 7.9 0.9 3.3 2.1 0.5 2.3 3.1 8.7 10-Yr. U.S. Treasury 1.50
U.S. 2.15 5.9 0.5 2.7 3.6 0.0 2.7 2.9 9.3 30-Yr. U.S. Treasury 1.50
Europe -0.11 11.2 1.1 3.3 0.5 0.5 2.0 3.5 9.1 1-Yr. CD Rate 1.96
EM Sovereign 5.05 7.1 0.6 9.6 9.8 -4.1 -0.3 1.4 12.5 30-Yr. Fixed Mortgage 3.69
U.S. High Yield 6.41 1.8 -5.6 17.8 7.0 -2.1 0.3 0.7 10.7 Prime Rate 5.25
❮ Swipe left for more
This table shows returns for various fixed income markets. It also includes other key rates like the 10-year U.S. Treasury, 30-year U.S. Treasury, 1-year CD rate, and 30-year fixed mortgage rate.
Note: Global = Citi World BIG Index (LCL); U.S. = Citi U.S. Broad Investment Grade Bond Index (USD); Europe = Citi Euro Broad Investment Grade Index (EUR); EM Sovereign = Citi Emerging Markets Government Bond Index (USD); and U.S. High Yield = Citi High-Yield Market Index (USD).

Asset Class Returns (Sorted by Performance)

Figure 5: Global Asset Class Returns (Year-to-Date)
Figure 5: ...
This chart shows global asset class returns (year-to-date). Data shown indicates United States (S&P 500) at 16.7%, EM Government Bond at 12.5%, U.S. High Yield at 10.7%, Euro (Euro STOXX 50) at 10.0%, U.S. Broad Investment Grade at 9.3%, Euro Broad Investment Grade at 9.1%, Japan (MSCI Japan) at 5.6%, and Emerging Markets (MSCI EM) at 1.9%.
Sources: Citi Research and Citi Personal Wealth Management as of August 31, 2019.There can be no assurance that these projections will be met. Actual results may be differ materially from the forecasts/estimates. The above table reflects the views of Citi Investment Research and Analysis (CIRA). CIRA forecasts take into consideration underlying economic, demographic, political, and psychological forces that drive market behavior. CIRA looks for trends and markets that offer potential as long-term investment ideas. You should carefully consider investment objectives, risks, charges, and expenses before investing.
Figure 6: S&P 500 Sector Total Returns (Year-to-Date)
Figure 6: ...
This chart shows the total return for the various S&P 500 sectors (year-to-date). Data shown indicates Information Technology at 29.4%, Real Estate at 28.5%, Consumer Discretionary at 21.4%, Consumer Staples at 21.2%, Communication Services at 21.2%, Utilities at 20.3%, Industrials at 19.0%, S&P 500 at 18.3%, Financials at 14.3%, Materials at 13.5%, Healthcare at 5.8%, and Energy at 2.1%.
Sources: Citi Research and Citi Personal Wealth Management as of August 31, 2019.There can be no assurance that these projections will be met. Actual results may be differ materially from the forecasts/estimates. The above table reflects the views of Citi Investment Research and Analysis (CIRA). CIRA forecasts take into consideration underlying economic, demographic, political, and psychological forces that drive market behavior. CIRA looks for trends and markets that offer potential as long-term investment ideas. You should carefully consider investment objectives, risks, charges, and expenses before investing.

Shawn Snyder
Shawn Snyder Citi Personal Wealth Management,
Head of Investment Strategy

Featured Posts

  • Washington Watch: The Path to the Presidency
  • Unanswered Questions
  • Gravity Still Exists
  • Spooked in September

Watch Video

Preview of webinar video: Shawn Snyder at desk with charts

Citi Advises Investors Not to Get ‘Emotional’ Ahead of the Election (8:35)

See More Content

Use the filters below to see more market commentary, useful webcasts and financial planning content.

articles found

Video of Shawn Snyder discussing the election and potential policy implications

Washington Watch: The Path to the Presidency Webcast

Shawn Snyder, Head of Investment Strategy, Citi Personal Wealth Management, and Bill Rys, Managing Director of Federal Government Affairs, Citigroup, share their thoughts on the potential policy implications.

Video (68:00)

Video of Shawn Snyder discussing how to invest in this new economic cycle

Mid-Year Outlook 2020 Webcast

Shawn Snyder, Head of Investment Strategy, Citi Personal Wealth Management, discusses how to invest in this new economic cycle with Steven Wieting, Citi Private Bank’s Chief Investment Strategist and Chief Economist.

Video (59.19)

Explore Citi Benefits

Market Insights are only one of the many benefits you get as a client.

Item 1 through 3 of 6
  • someone touching a tablet with their finger

    Personalized Financial Planning

    Collaborate with your dedicated team to create a personalized financial plan around your life’s “what ifs” using Citi Wealth Advisor, Citi Personal Wealth Management’s digital financial planning solution.

    Learn More on Personalized Financial Planning

  • man and woman on couch looking at tablet

    Ways to Invest

    Citi offers a range of investment and insurance products and services that can help you work toward your financial goals. These products include individual stocks, fixed income and mutual funds, as well as more sophisticated offerings like alternative investments and structured products.

    Learn More on Ways to Invest

  • screenshot of mobile phone displaying charts

    World-class Investment Capabilities

    Gain access to Citi Personal Wealth Management’s world-class investment platform, including a breadth of product choices and research from hundreds of analysts globally.

    Learn More on World-class Investment Capabilities

Contact Us


Find a Citi Personal Wealth Management
Financial Advisor

Call: 1-877-357-3399 | 9am – 7pm ET (M–F)

Investment Services: 8am – 9pm ET (M–F) | 9am – 7pm ET (Sat)

Locate an Advisor

Contact your Dedicated Team

Call: 1-800-321-2484 | TTY 1-800-788-6775
or Sign on to schedule an appointment.

Logo: Citi - Welcome what's next
INVESTMENT AND INSURANCE PRODUCTS: NOT FDIC INSURED • NOT A BANK DEPOSIT • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • NO BANK GUARANTEE • MAY LOSE VALUE

Important Information for You to Know About Our Business and Relationship With You

We are required to deliver two important disclosure documents about our business and relationship with you:

  • Form Client Relationship Summary ("Form CRS") is a brief summary of the brokerage and advisory services we offer.
  • Regulation Best Interest Disclosure Statement is a more detailed description of the brokerage services we offer and our obligations under Regulation Best Interest when we make recommendations to you as your broker-dealer.

Please review both of these important documents online at http://www.citi.com/investorinfo/. If you prefer paper copies, please contact your advisor or call us at (800) 846-5200. TTY 1-800-788-6775.

Citi logo

Important Information

The MSCI ACWI (All Country World Index) captures large and mid cap representation across 23 Developed Markets (DM) and 23 Emerging Markets (EM) countries. With 2,483 constituents, the index covers approximately 85% of the global investable equity opportunity set.

S&P 500 Index is an unmanaged, market value-weighted index of 500 stocks generally representative of the broad stock market. An investment cannot be made directly in a market index.

Dow Jones Industrial Average is a price-weighted index of the 30 “blue-chip” stocks and serves as a measure of the U.S. market, covering such diverse industries as financial services, technology, retail, entertainment and consumer goods. An investment cannot be made directly in a market index.

The Nasdaq composite index is a market-capitalization weighted index of more than 3,000 common equities listed on the Nasdaq stock exchange. The types of securities in the index include American depositary receipts, common stocks, real estate investment trusts (REITs) and tracking stocks.

The EURO STOXX 50 Index covers 50 blue-chip stocks from 12 Eurozone countries: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain.

The Nikkei 225 is Japan’s leading index. It is a price-weighted index comprised of Japan’s top 225 blue-chip companies on the Tokyo stock exchange.

The MSCI Emerging Markets Index reflects performance of large and mid-cap stocks in roughly 20 emerging markets.

The Citi World Broad Investment Grade Bond index is weighted by market capitalization and includes fixed rate Treasury, government sponsored, mortgage, asset backed, and investment grade (BBB–/Baa3) issues with a maturity of one year or longer and a minimum amount outstanding of $1 billion for Treasuries, $5 billion for mortgages, and $200 million for credit, asset-backed and government-sponsored issues.

The Citi U.S. Broad Investment-Grade Bond Index (USBIG) tracks the performance of US Dollar-denominated bonds issued in the US investment-grade bond market. Introduced in 1985, the index includes US Treasury, government sponsored, collateralized, and corporate debt providing a reliable representation of the US investment-grade bond market. Sub-indices are available in any combination of asset class, maturity, and rating.

The Euro Broad Investment-Grade Bond Index (EuroBIG) is a multi-asset benchmark for investment-grade, Euro-denominated fixed income bonds. Introduced in 1999, the EuroBIG includes government, government-sponsored, collateralized, and corporate debt. Sub-indices are available in any combination of asset class, maturity, and rating.

The Citi Emerging Market Sovereign Bond Index (ESBI) includes Brady bonds and US dollar-denominated emerging market sovereign debt issued in the global, Yankee and Eurodollar markets, excluding loans. It is composed of debt in Africa, Asia, Europe and Latin America. We classify an emerging market as a sovereign with a maximum foreign debt rating of BBB+/Baa1 by S&P or Moody's. Defaulted issues are excluded.

The US High-Yield Market Index is a US Dollar-denominated index which measures the performance of high-yield debt issued by corporations domiciled in the US or Canada. Recognized as a broad measure of the North American high-yield market, the index includes cash-pay, deferred-interest securities, and debt issued under Rule 144A in unregistered form. Sub-indices are available in any combination of industry sector, maturity, and rating.

The above mortgage rate is the base price for a 30-year fixed-rate loan from Citi and assumes excellent credit. The actual mortgage product/rate you qualify for will depend upon verification of your home's value, your credit score and other considerations.

The Monthly Market Snapshot report should not be considered a recommendation or research report. Nor should it be considered a solicitation, advice or a recommendation with respect to any investment strategy, asset allocation or particular investment. The Market Update is not intended to constitute “research,” as that term is defined by applicable regulations. The views expressed herein are those of the author and do not necessarily reflect the views of Citigroup Global Markets Inc. or its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.

There may be additional risk associated with international investing, including foreign, economic, political, monetary and/or legal factors, changing currency exchange rates, foreign taxes, and differences in financial and accounting standards. These risks may be magnified in emerging markets. International investing may not be for everyone.

Bonds are affected by a number of risks, including fluctuations in interest rates, credit risk and prepayment risk. In general, as prevailing interest rates rise, fixed income securities prices will fall. Bonds face credit risk if a decline in an issuer’s credit rating, or creditworthiness, causes a bond’s price to decline. High yield bonds are subject to additional risks such as increased risk of default and greater volatility because of the lower credit quality of the issues. Finally, callable bonds can be subject to prepayment risk. When interest rates fall, an issuer may choose to borrow money at a lower interest rate, while paying off its previously issued bonds. As a consequence, those investors who held the called bond will be forced to reinvest in a market where prevailing interest rates are lower than when the initial investment was made.

The market and planning commentary on this site may discuss topics that are timely to current events at the time they were written or filmed. The relevance of such topics may change at future dates.

Investments are subject to market fluctuation, investment risk, and possible loss of principal.

Diversification and asset allocation do not protect against loss or guarantee a profit. Past performance is no guarantee of future results.

Please consult your Financial Advisor before making any investment decisions.

Citigroup Inc. and its affiliates do not provide tax or legal advice. To the extent that this material or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Any such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.

The information set forth was obtained from sources believed to be reliable, but we do not guarantee its accuracy or completeness.

These strategies do not necessarily represent the experience of other clients, nor do they indicate future performance or success. Investment results may vary. The investment strategies presented are not appropriate for every investor. Individual clients should review with their advisor the terms and conditions and risk involved with specific products or services.

The products and services mentioned in this communication are not offered to individuals’ resident in the European Union, European Economic Area, Switzerland, Guernsey, Jersey, Monaco, San Marino, Vatican and The Isle of Man. Your eligibility for a particular product and service is subject to a final determination by us. This communication is not, and should not be construed as, an offer, invitation or solicitation to buy or sell any of the products and services mentioned herein to such individuals.

Citi Personal Wealth Management is a business of Citigroup Inc., which offers investment products through Citigroup Global Markets Inc. (”CGMI”), member SIPC. Citigroup Life Agency LLC (“CLA”) offers insurance products. In California, CLA does business as Citigroup Life Insurance Agency, LLC (license number 0G56746). Citibank, CGMI, and CLA are affiliated companies under the common control of Citigroup Inc.

©2020 Citigroup Inc. Citi, Citi and Arc Design and other marks used herein are service marks of Citigroup Inc. or its affiliates, used and registered throughout the world.

Privacy | Notice at Collection | CA Privacy Hub