Signals Through the Noise
From Washington, D.C. to the Middle East to Europe, the conversations I’ve been having this past week all point in the same direction: we’re in the midst of a shift that’s bigger than any one policy. This is about resilience, risk and rewiring global strategies for a more dynamic world. Citi’s clients aren’t just watching these changes unfold, they’re asking how to move with them.
We are entering a new phase of globalization — one less defined by cooperation, and more by strategic self-interest. Long-held assumptions are being challenged, not just by tariff announcements but by a deeper confidence shock. The near-term impact is already being felt, and the long-term trajectory is being rewritten in real time.
Markets are signaling the shift
If you’re looking to markets for clarity, you might be a tad disappointed. But if you’re looking for signals, they’re everywhere. Treasury yields rose even as equity markets wobbled. The U.S. dollar, typically a safe haven, has weakened at moments when it used to rally. That tells us something deeper is going on — investors aren’t just pricing near-term risks; they’re reevaluating the credibility of long-held certainties.
It's showing up in how capital moves. Pensions and asset managers are tilting more towards Japan, India and parts of Europe. Hedge funds are being selective and didn’t chase the April equity bounce. Sovereign wealth funds are diversifying more aggressively. Hedging against the dollar is now at levels we haven’t seen in years.
Let’s be clear though: the dollar isn’t going anywhere as the global reserve currency, and the U.S. retains enormous advantages: deep capital markets, a flexible labor market and an unrivaled entrepreneurial spirit.
What we’re hearing on the ground
The economic consequences will play out more slowly. Tariffs work like sand in the gears of growth, increasing friction over time. We’re hearing it directly from clients. Orders are stalling. Ports in Shanghai, Shenzhen and L.A. are seeing sharp drops in volume. At the same time, there may be a break in the clouds. With inflation cooling slightly and a temporary agreement between Beijing and Washington to lower tariffs, markets rallied sharply this week and investors now believe the worst-case scenario is off the table.
Still, uncertainty remains. Companies are pausing decisions, delaying capex and holding off on hiring. Many are preparing for second- and third-order effects, from demand shocks to supplier uncertainty.
CEOs tell us they can absorb a 10% tariff, but 25% or more changes the calculus. Some pharma companies are shifting production to the U.S. to avoid tariffs and use existing dual-sourcing capabilities. Auto parts manufacturers also are exploring relocation options, although facility buildouts require long lead times. Airlines are reworking schedules and accelerating aircraft purchases, particularly for U.S.-bound routes. And in Turkey, Morocco, and Egypt, companies are evaluating shifting capacity to lower-tariff, scalable markets.
These moves are incremental for now. Even if tariffs ease, the disruptions — to trust, supply lines, and planning cycles — will take time to unwind. And the rest of the world isn’t standing still. Countries are looking inward, and sideways. What emerges could be a more multipolar system of trade and capital. That creates complexity — and opportunity.
This is precisely when Citi’s clients need us
Citi’s global network was made for complexity. We can connect dots across borders, execute at scale and deliver real-time insights when clients need them most. And we’re already seeing it: clients are accelerating moves into new markets, drawing on our liquidity and leaning on our guidance. Across our businesses, the value of our breadth and depth has never been clearer.
It’s difficult to forecast what comes next when the gap between the hard data and the soft data is as great as it has ever been. If current headwinds persist, global growth could slow by as much as a point. U.S. inflation could stay stubbornly above the Fed’s target, complicating policy decisions. This is also an opportunity — for countries to invest in infrastructure, education, energy security; to reform, diversify, and prepare for a different kind of growth. Europe, in particular, has a real opportunity to strengthen its competitive position. It’s a time for strategic flexibility and clear-eyed planning — not conviction-based calls.
And that’s what we bring. Citi has been through a lot in our long history — be it shocks, crises or transitions. We know how to help clients make sense of what’s happening, and how to support them as they adapt. At the same time, I’m proud and grateful for how Citi colleagues consistently show up for one another. The changes the world is experiencing now and the rise in conflicts undoubtedly are taking a toll at the individual level, and the support we give to our colleagues makes a difference.
The coming months will be pivotal for the world, for our clients, and for Citi. I am confident Citi will keep leading the conversation and showing up where it matters most.
