Alert iconWarning: Unsupported web browser

In View no longer supports your current web browser version, which means some functionality may be limited. Please update your browser for the best experience before you log in.

close icon
Citi Private Bank logo

Unsupported browser

Our website no longer supports your current web browser version, which means you are no longer able to access this website. Please update your browser to continue.

Investment strategy
June 27, 2021
2 mins

Being bullish on near-term economic growth prospects

June 27, 2021
2 mins
David Bailin
Chief Investment Officer and Global Head of Investments
Steven Wieting
Chief Investment Strategist & Chief Economist
Aerial view of Manhattan in New York

Investors should seek to transition from a sole focus on mean reversion to position for more enduring growth opportunities beyond COVID. We are still bullish on growth prospects in 2021 and 2022.

  • The US bond market has absorbed a mountain of bearish news with a surge in 1H economic growth, the highest core inflation rate in 30 years and the Fed preparing markets for an end to bond purchases. Year-to-date job growth has averaged 480,000. Record high unfilled job openings support further gains. Even so, 10-year US Treasury yields have been stuck just below 1.5%, lower than even the central bank’s long-term inflation target.
  • Excessive investor positioning for an inflation surge, technical factors buoying domestic bond purchases, and feeble foreign yields all seem partly responsible for the “stall” in the US bond market.
  • An astute trader could easily argue that yields would tend to peak with the strongest growth rate of the economy. Since a US infrastructure bill of nearly any scope will not have an immediate impact, future rate rises could be limited.
  • While we expect 10-year yields to rise to 2% by year-end 2021 we consider the implications of being wrong. Just like bonds, one consequence may be growth equities remaining at “unsatisfying” valuations.
  • The pace of US consumer goods spending is cooling after the stimulus fades. However, the world’s factories are still in overdrive to replenish inventories. With the reopening of travel and leisure services, this combination has accelerated growth driving the second quarter US real GDP to +10%. This is not sustainable.
  • We believe secular disinflation has ended. Over the past forty years, multi-year selloffs in long-term US government bonds have been rare. When they’ve occurred (as recently as 2013/2014) the maximum rise has been 50 basis points or less in the second year.
  • As we noted in our Mid-Year Outlook, portfolios should seek to transition from a sole focus on “Mean Reversion” to position for more enduring growth opportunities beyond COVID. The global price of crude oil has climbed back to $75 and the traditional energy sector has returned 47% in the year-to-date. We expect this to refocus policymakers and investors alike on the transition to sustainable energy.


See our insights and the issues that matter for your wealth.

View all insights
If you are a Citi Private Bank client you can check the value of your portfolio by reviewing your monthly statements or, if you use Citi Private Bank In View, by navigating to the Account Overview page via Portfolio → Overview. If you have any queries please contact your usual Citi Private Bank representative.
Close Contact Form
Close Modal

You're about to leave the Citi Private Bank website

By clicking continue, you will visit a third-party website that is not owned or managed by us.

We have no control of the content, privacy or security beyond this point.


Stay on this page