Global Quantitative Macro Strategy: Sector Flows Flash Update: Financials favored as market broadens

Research evidence excerpt

Global Quantitative Macro Strategy: Sector Flows Flash Update: Financials favored as market broadens

Flash |

01 Jul 2026 15:24:26 ET │ 9 pages

Global Quantitative Macro Strategy

Sector Flows Flash Update: Financials favored as market broadens

CITI'S TAKE

We give a flash update based on Citi equity sector flows. We saw long-only

managers net buying last week, increasing exposure in most sectors,

especially Tech, Financials, and Health. Hedge fund flows, on the other

hand, switched to negative. They had outflows in Tech, Industrials, and Alex SaundersAC

Consumer Discretionary while buying Financials, Health Care, and +1-212-723-1058

Consumer Staples. Top three sectors based on the last 2m of flows were alexander.saunders@citi.com

Financials, Industrials, and Health Care while Tech, Consumer

With thanks to Discretionary, and Communications made up the bottom three again this

Irem Sen week. Our market-implied regime analysis suggests that market internals

are currently most correlated with the Recovery regime. The market

broadened in the past month as concerns around AI infrastructure costs

grew and the recent IPO-driven enthusiasm cooled, moving away from

heavily AI-exposed sectors into defensives and traditional

cyclicals. Financials and Real Estate relative strength, as well as

Communications weakness, increased the Recovery regime correlation.

Our model signals based on recent flows favor Financials, Industrials, Health Care

vs. Tech, Consumer Discretionary, Communications. Following Citi’s equity sector

flows in the US can be a useful signal. Figure 1 shows the output from our flow-

based model, which follows the long-only manager flows over the past two months.

Long-only managers were net buyers, having inflows in Financials, Industrials, and