CITIC Securities says oil stabilization, softer-than-expected US nonfarm
payrolls and downgrades to Fed rate-hike odds have not reversed the rise in
global long-term yields. The firm attributes higher yields to persistently
strong private-sector investment and financing demand—trillions in investment
have driven North America out of the post-crisis low-growth, low-rate norm. A
sustained high-rate global environment is likely until an inflection in the AI
investment cycle. Demand relatively insensitive to elevated overseas rates is
concentrated in North American AI and sectors tied to expanded Chinese central
fiscal spending. Former outperformers such as offshore exporters and resource
plays face pressure. In weak demand conditions, assets benefiting from supply
rationalization are scarce; the unwinding of excessive domestic competition next
year merits attention. Tactical positioning: in the near term use cyclical,
high-momentum sectors and supply-rationalization beneficiaries to cope with high
rates; closely monitor the AI investment-cycle turning point.
