Citi See More Room To Run In Reflation Trade

Citi note that reflation trades remain in focus, with "U.S. yields, copper, oil and many global equity indices all pushing to new post-COVID highs. We see further room to run in these, as another substantial U.S. fiscal package, further vaccine rollouts and plans for re-openings, and a declining U.S. Treasury General Account balance are coming through. Positioning signals seem somewhat mixed, particularly in equities, but not stretched in short rates positions and certainly not in short USD. Profit-taking and retracements are likely over time, but also seem likely to be shallow in this environment."