Wealth Outlook 2024 - Slow then grow

Glossary 139 monetary policy, slowing the growth in the money supply from 8% on a year-over-year basis to just 2%. (The asso- ciated increase in the fed funds rate to accomplish that slowing was roughly 4.5 percentage points, to 9 percent). This set the stage for the 1970s “stagflation,” combin- ing high inflation with uneven economic growth. Shadow banking system is a term used to describe fi- nancial intermediaries that engage in bank-like activi- ties, usually lending, but are not subject to banking reg- ulatory oversight . Spread (and spread tightening) describe two aspects of yield activity. Yield spread is the difference between the quoted rate of return on different debt instruments, which often have varying maturities or credit ratings. Credit spreads often widen during times of financial stress when investors make a move toward safe-haven assets, driving down the yields of, say, US Treasurys, and drives up those of corporate and other types of sovereign bonds perceived to be riskier. Tightening often occurs during improving economic conditions. Strategic Return Estimates ( SRE) are Citi Global Wealth Investments’ forecast of returns for specific asset classes over a 10-year time horizon. The forecast for each specific asset class is made using a proprietary methodology that we believe is appropriate for that asset class. Super Tuesday is the US presidential primary election day, usually in March when party members in over 20 states vote in primary elections to select their party's presidential candidate. Approximately one-third of all delegates to the presidential nominating conventions can be won on Super Tuesday—more than on any other day. The EU-UK Trade and Cooperation Agreement is the key agreement that governs the relationship after Brexit be- tween Europe and the UK. (It came into effect on May 1, 2021, and is up for renewal in 2026.) The agreement out- lines the parameters for free trade of goods as well as lim- ited mutual market access in services. Volatility is a statistical measurement of the variability of return, commonly defined as either the variance or stan- dard deviation of returns. The higher an asset or asset class’s volatility, the riskier it is seen as being. WTI Crude , for “West Texas Intermediate” crude oil, is a benchmark used by markets to represent petroleum pro- duced in the US. It is based on a pipeline hub in Cushing, Oklahoma. It’s priced similarly to Brent Crude, which is extracted fromtheNorthSea near Europe, thoughdoesn’t have the same global reach. While both are considered light-sweet crude and trade on US exchanges and their prices tend to be correlated, there are times when WTI is more expensive than Brent and vice versa. Yield curve is a visual representation of how much it costs to borrow money (or how much can be earned from lending money) for different periods of time. The curve is formed by a plotting of the yields for differing maturities of the same type of bond. So, the US Treasury Index, for example, is based on the daily plotting of yields all along the curve. A curve can “steepen” on higher long-term rates and/or lower short-term ones, or “flatten” on the opposite combination. An inversion of a yield curve is a more atypical occurrence in which the yields at the short- er end of the curve are higher than those at the longer. This tends to happen during periods of tighter monetary policy, as has been the case with Treasurys and other ma- jor DM sovereign debt for much of 2022 and 2023. Yield-to-maturity is the annualized total return received on a bond when the bond is held to maturity and bond coupons are assumed to be re-invested. The total return includes both the payment of coupons and the return of the principal at maturity. Wealth Outlook 2024