Citi Urges Investors to Cut Excess Cash as Inflation Tops 4.2%
Updated
Updated · CNBC · Jun 29
Citi Urges Investors to Cut Excess Cash as Inflation Tops 4.2%
2 articles · Updated · CNBC · Jun 29
Summary
Citi Wealth said investors should reduce cash beyond near-term needs because May inflation has pushed real returns on cash negative.
4.2% CPI and 4.1% PCE both outpaced the 3.46% seven-day yield on major taxable money funds, eroding purchasing power even as cash rates stay historically elevated.
$7.9 trillion is parked in money market funds, and Citi said many Americans still hold cash far above historical norms despite that drag.
Citi said cash should mainly cover 12- to 24-month spending, liquidity and market-dip needs; excess funds can move into dividend stocks or high-quality one- to three-year bonds.
Short-duration Treasuries and investment-grade debt are Citi's preferred lower-risk alternative, with active security selection important because credit spreads remain near historical lows.