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Equities and Credit Diverge: Citi Analysts Warn of Mixed Signals
13 Nov, 2025
Summary
- U.S. stocks continue November rebound
- Citi analysts see gap between equity and credit risk premiums
- Optimism over federal government shutdown and strong Q3 profits
On November 13, 2025, U.S. stocks continued their rebound from earlier in the month, appearing poised to ride strong third-quarter corporate profits and optimism over the recent federal government shutdown into the end of the year. However, Citi analysts, led by Richard Schlatter, see a more mixed picture.
The analysts have observed an increasing gap between the risk premiums implied by equities and those in the credit markets. This divergence suggests that while the stock market remains bullish, the credit markets may be signaling more caution about the economic outlook.
Despite the positive sentiment driving the stock market's November rebound, the Citi team believes the growing disconnect between equities and credit warrants close monitoring. As investors navigate the final weeks of 2025, they will need to weigh the optimism in the stock market against the more cautious signals emanating from the credit markets.
