Stocks Face Hit as $800 Billion Stimulus to Fade, Citi Says
- Risk rally ignores worsening growth, corporate profit outlook
- Unwind of ‘stealth’ easing to place fresh pressure on markets
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Equities and other risk assets will take a hit when central banks withdraw as much as $800 billion of stimulus deployed to prop up the global economy, according to Citigroup Inc.
The risk rally has been fueled by the injection of over $1 trillion of central bank liquidity, and high-frequency liquidity indicators suggest this is already stalling, Matt King, Citi’s global markets strategist, wrote in a note published late Tuesday in New York. Apart from monetary support deployed by other central banks, the Federal Reserve has also bolstered its balance sheet by $440 billion in the wake of the US banking crisis, he said.