CITIC Securities said in a research note that the market’s pricing power around inflation is weakening quickly, even after U.S. September CPI and PPI both came in above expectations. According to the note, the reaction in long-dated U.S. Treasury yields faded within 24 hours. After the CPI release on Oct. 14, the 10-year Treasury yield briefly climbed about 13 basis points to 5.325% before giving back the move and closing lower. After the PPI release on Oct. 15, the 10-year yield rose only about 2.5 basis points, while the 30-year yield fell directly, and the 10-year later dropped back to around 5.048%.
The firm said the long-end pricing anchor has now shifted clearly toward a “growth/AI cycle.” In its view, the “recession” being priced is essentially a tail risk tied to a downturn in the AI capital expenditure cycle, rather than a traditional demand recession, and that dynamic can coexist with stagflation. CITIC Securities added that the market is still in a tentative, left-side pricing phase and has not yet confirmed a trend. In the near term, it expects U.S. equities to continue rotating across sectors, with funds moving from AI themes toward energy, defensive consumer staples, and healthcare. The note also said Hong Kong stocks may benefit from a reversal in overseas AI hardware trades and from allocation changes if Indonesia is removed from the MSCI Emerging Markets Index.
Odaily reported that CITIC Securities said in a research note that U.S. September CPI rose 3.7% year over year and PPI rose 6.3% year over year, with both readings coming in above expectations, but the response in long-dated U.S. Treasury yields weakened quickly within 24 hours.
According to the note, after the CPI release on Oct. 14, the 10-year U.S. Treasury yield first jumped about 13 basis points to 5.325%, then gave back the gains and closed lower. After the PPI release on Oct. 15, the 10-year yield moved up only about 2.5 basis points, while the 30-year yield fell outright. The 10-year yield then quickly retreated to around 5.048%.
CITIC Securities said the market’s ability to price inflation is fading rapidly, and the pricing anchor for the long end has clearly shifted toward a “growth/AI cycle.” The note said the “recession” being priced is, in essence, a tail risk from a downturn in the AI capital expenditure cycle rather than a traditional demand recession, and that it can coexist with stagflation.
The firm added that the market remains in a tentative left-side pricing stage and that no trend confirmation has formed yet.
For near-term market performance, CITIC Securities said U.S. stocks may continue to see sector rotation, with capital moving from AI themes toward energy, defensive consumer staples, and healthcare, which may benefit from expectations of a Democratic sweep in the election. The note also said Hong Kong stocks may benefit from a reversal in overseas AI hardware trades and from allocation changes tied to the possibility that Indonesia could be removed from the MSCI Emerging Markets Index.
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