STOCKS | Citi Stays Bearish on the Dollar as Oil and Yield Pressure Eases

Citi strategists expect oil prices and the U.S. labor market to weaken, which they said would pressure the dollar and ease pressure on long-term yields. According to Sina Finance, Adam Pickett and other strategists wrote that the "pressure valve will shift to foreign exchange," and said they see only "weak evidence" that fiscal concerns, inflation expectations, or oversized corporate bond issuance are driving higher Treasury yields. They said the recent rise in yields has been entirely a rise in real yields and has mainly tracked energy prices. The strategists also said they remain short the dollar through the euro, gold, and high-yield emerging-market currencies, while keeping a long risk position in U.S. stocks. They added that lower energy prices and a softer labor market should also reduce pressure on Treasury Secretary Scott Bessent, who had previously expanded buybacks to curb rising borrowing costs. According to Sina Finance, they said there is unlikely to be any major action on Treasury issuance or fiscal policy before the November 2 quarterly refunding announcement and the November 3 midterm elections.