The economic uncertainty in the United States, marked by andl Risk of recession And the fall of the variable income did not go unnoticed by Citi analysts. In this context, The bank anticipates a pause in “American exceptionalism” and sees greater potential in Chinese actions.
Recently, Citi had reduced its recommendation to the US Variable Income of overflow to neutral, And now he confirms this vision with some nuances. “We had not fully implemented our idea that American exceptionalism was in pause, but now it has become more evident,” they explain. Consequently, Han reduced its rating of the US variable to neutralwhile they have improved China to overflow.
In the credit market, the bank eliminated its preference for the High Yield American and went to underprate Assets with investment grade (IG) in the US. On the other hand, Cerraorn Infraponderation In the IG of the European Union, although they maintain an overview underpathed In the credit allocation.
Citi analysts believe that, in the long term, US leadership could return with the reactivation of enthusiasm for artificial intelligence (AI). However, In the coming months, they expect US growth to be less than the rest of the world.
China: an attractive opportunity
For citi, Chinese actions have an attractive potentialan opinion that reinforces the increase in tariff risk derived from Donald Trump’s commercial policy. “Even without considering this factor, the case of Chinese technology was solid,” they emphasize.
Examples such as Deepseek, which showed that Chinese technology is up to the western – of the West despite export restrictions, reinforce this thesis. In addition, advances such as Hunyuan de Tencent (a Video by AI) and QWQ-32B of Alibaba (an advanced language model) show the rapid development of the sector.
President Xi Jinping also adopted a more favorable position towards the technological sector, recognizing its importance in competition with the US in the field of AI. Despite his recent rebound, Chinese technological actions continue to quote relatively low levels compared to other global AI assetswhich makes them an attractive option.
Citi argues that, although the rise of AI in the US did not come to an end, its impact in the short term could be limited. “Our position neutral About the US has a horizon of 3 to 6 months. In a broader frame, we do not believe that the AI bubble has been exhausted, and the US will continue to be a leader, possibly along with China. “
Tariffs, a key factor
The evolution of the commercial relationship between the US and China will be decisive for the markets. Citi points out that Trump could travel to China next month to meet XI, what could be interpreted as a sign of distension and facilitate advances in the resolution of the conflict.
If more severe tariffs are implemented, Japan could be affected, and the strategy of underprate Japanese assets would offer some coverage. However, Citi believes that the impact of 20% increase in tariffs on China was limited so far.
A higher risk would be for the US to intensify export controls or adopt non -tariff measures to stop China’s technological advance. Although these restrictions could be harmful to certain companies in the short term, CITI considers a significant deterioration in the commercial relationship in the short term.
In conclusion, eThe bank maintains a position neutral for variable income, with greater exposure to China and a short position in Japan.
Source: Ambito
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