Global Quantitative Macro Strategy: Sector Flows Flash Update: Flows Point to Financial Tightening Conditions

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Global Quantitative Macro Strategy: Sector Flows Flash Update: Flows Point to Financial Tightening Conditions

Flash |

28 Jul 2026 12:56:23 ET │ 9 pages

Global Quantitative Macro Strategy

Sector Flows Flash Update: Flows Point to Financial Tightening

Conditions

CITI'S TAKE

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

managers net sellers last week, reducing exposure in most sectors,

especially Financials, Communications and Consumer Discretionary. Alex SaundersAC

Hedge fund flows remained positive. They bought Tech, Industrials and +1-212-723-1058

Financials while having further outflows in Health Care and Consumer alexander.saunders@citi.com

Staples. Top three sectors based on the last 2m of flows were Vinh VoAC

Tech, Financials and Industrials while Consumer Staples, Energy, +44-20-75-086-717

Materials remained the bottom three. Our market-implied regime analysis vinh.vo@citi.com

suggests that market internals are currently most correlated with the

"Tightening of financial conditions" regime. Investor focus has recently With thanks to

Irem Sen been split between easing US-Iran tensions, a Fed grappling with dovish

data despite hawkish messaging, and growing concerns that cheaper

open-weight AI models could challenge elevated US tech valuations. The

resulting sector rotation favoured Energy and Health Care at the expense

of Tech, pushing market behaviour closer to a traditional tightening

regime.

Our model signals based on recent flows continue to favor Tech, Financials and

Industrials vs. Consumer Staples, Energy and Materials. 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.