Analysis: The market's pricing power over inflation is rapidly fading, and the long-end pricing anchor has clearly shifted to the "growth/AI cycle"

Odaily reports: CITIC Securities released a research report noting that U.S. September CPI came in at 3.7% year-over-year and PPI at 6.3% year-over-year, both exceeding expectations, but the reaction of long-end U.S. Treasury yields quickly faded within 24 hours: after the CPI release on October 14, the 10-year U.S. Treasury yield first spiked about 13bp to 5.325%, then gave back the gains and closed lower; by October 15, after the PPI release, the 10-year yield rose only very slightly by about 2.5bp, the 30-year yield fell directly, and the 10-year yield then quickly dropped back to around 5.048%.

The market's pricing power over inflation is rapidly fading, and the long-end pricing anchor has clearly shifted to the "growth/AI cycle"—the "recession" it is pricing is essentially the tail risk of a downturn in the AI capital expenditure cycle, rather than a traditional demand recession, and it can coexist with stagflation. This is still left-side exploratory pricing and does not yet constitute trend confirmation. In the short term, U.S. equities may continue sector rotation, with capital switching from AI themes to energy, defensive consumer staples, and healthcare, which may benefit from expectations of a Democratic sweep in the midterm elections. Hong Kong stocks may also benefit from a reversal in overseas AI hardware trading, as well as capital allocation driven by Indonesia potentially being removed from the MSCI Emerging Markets Index.