AI cycle

CITIC Securit

2026-10-18 10:46:31

CITIC Securities says inflation pricing is fading as long-end markets shift toward a growth and AI cycle

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.

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Goldman Sachs

2026-08-04 06:33:06

Goldman Sachs Partner John Flood Says Earnings Remain the Main Driver as S&P 500 Eyes Another Record This Year

Goldman Sachs partner John Flood said corporate earnings remain the strongest support for U.S. equities, with the S&P 500 potentially setting another record high before year-end as positioning becomes cleaner. Goldman’s data shows the index’s second-quarter earnings-per-share growth tracking at 45% year over year, far above the 22% consensus estimate at the start of the quarter. Even after stripping out non-recurring items tied to roughly $151 billion in equity investment-related “other income” from Alphabet and Amazon, plus about $3 billion of similar income from Microsoft, EPS growth still stands at 26%, the fastest pace since 2021. Goldman also said analysts have begun lifting 2027 earnings forecasts, with energy and financials seeing the largest revisions, while the breadth of upgrades remains positive across the index. On positioning, Goldman’s sentiment and positioning gauge has fallen to the 53rd percentile, hedge funds have cut leverage, and retail leverage is cooling across markets including South Korea, Japan, and U.S. semiconductor shares. Flood said that backdrop leaves the market in a healthier state, though Goldman flagged a seasonal risk: in 13 midterm election years since 1974, the median S&P 500 return from early August to Election Day was 0%.

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