Research @ Citi Episode 61: Bullish with a Seatbelt — Risk Assets and Investment Themes for 2026
Jan 8, 2026
Join Lucy Baldwin, Global Head of Citi Research, as she dives into the investment landscape for 2026. She discusses a resilient economy and the potential for two Fed cuts, balancing caution with optimism. AI-driven investments could push S&P 500 targets to 7,700, while hedging equity risks with credit is crucial. Lucy highlights regional equity positioning, big tech's performance, and the role of cryptocurrencies and commodities in the coming year. She also explores the societal impact of AI and the fierce US-China competition in technology.
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Resilient Growth With Early Cuts
- The economy looks resilient into early 2026 with central-bank stimulus and policy support sustaining growth.
- Citi expects the Fed to cut rates twice early in 2026 while earnings and AI investment drive upside for equities.
Hedge Equity Risk With Credit
- Hedge equity exposure by using credit hedges because credit may be more negatively skewed than equities from AI issuance risks.
- Use credit as a risk-management tool rather than relying solely on equity diversification.
AI Leaders Can Extend Market Leadership
- Tech and AI leaders can still drive market gains as earnings revisions continue to surprise to the upside.
- The market leadership may persist, so breadth should be sought via cyclicals and unloved sectors like healthcare.