Citi(US:C)2025-06-04 01:50Investment Rating - The report maintains a positive outlook on risky assets, recommending to stay long equities and FX carry [2][11]. Core Insights - De-dollarization is a significant theme, with evidence suggesting foreign concerns for US assets and a shift in European investor preferences towards local equities [3][9][12]. - The global bond glut is real, with expectations that term premia could rise by approximately 50 basis points over the next year due to increasing net supply of global safe assets [3][38][45]. - USD dominance as the global reserve currency is projected to remain until 2070 under current trends, with EUR seen as the most viable alternative [4][57][59]. Summary by Sections De-dollarization - Evidence indicates a shift in asset allocation away from US equities, particularly among European investors, with significant outflows from US-focused ETFs [10][21][32]. - The USD's status as a global reserve currency is expected to persist, with projections showing a decline in USD share and a stable growth for EUR [57][63]. Global Bond Glut - The report estimates that the global bond glut will continue, with term premia expected to rise by around 50 basis points due to increased net supply of safe assets [38][45]. - Stablecoins are emerging as a growing demand source for US Treasury bills, although their impact on longer-term debt demand may be limited [51][52]. USD Dominance - The USD remains dominant in global financial transactions, accounting for 88% of FX turnover and over 50% of global FX reserves [73][74]. - Despite some vulnerabilities in trade invoicing, the overall USD hegemony is stable, with ongoing increases in its share of international payments [73][76].