Analysis: The Long-End Pricing Anchor Has Clearly Shifted to the 'Growth/AI Cycle', and the Market's Inflation Pricing Power for the U.S. Is Rapidly Diminishing

China Securities (CITIC Securities) released a research report noting that U.S. September CPI at 3.7% YoY and PPI at 6.3% YoY both consecutively exceeded expectations, but the reaction of long-end U.S. Treasury yields faded rapidly within 24 hours: after the CPI release on October 14, the 10-year U.S. Treasury yield first surged roughly 13bp to 5.325%, then gave up gains to close lower; after the PPI release on October 15, the 10-year yield only edged up a marginal ~2.5bp, while the 30-year yield moved directly downward, followed by the 10-year yield quickly retreating to around 5.048%. The market's pricing power for inflation is rapidly diminishing, and the long-end pricing anchor has clearly shifted to the 'Growth/AI Cycle' — the 'recession' being priced essentially refers to the downside tail risk of the AI capital expenditure cycle, rather than a traditional demand recession, and can coexist with stagflation. Current positioning remains on the left side of the market as tentative pricing, and has not yet formed a confirmed trend.

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