Citigroup Australia CEO Says US Treasuries Are Losing Appeal as a Hedging Tool

Citi Australia CEO Mark Woodruff said that with rising supply, persistent inflation and higher neutral rates, U.S. Treasuries are becoming less attractive as a portfolio hedge. He said a 5% 10-year Treasury yield is typically an ideal hedge for equity allocations, but the current market environment of rising consumer prices and rates has weakened demand. Speaking to media on Tuesday on the sidelines of Citi Australia and New Zealand Investment Conference in Sydney, Woodruff said, "There's more demand for hedges, but it's slightly different this cycle." Woodruff said, "The bond market still has some issues. Supply is increasing, and the neutral rate is rising, and those pressures in themselves make bonds less easy to hedge risk than in previous cycles."