Citi strategists recommend exiting short US stock positions

Macro strategists from Citigroup Inc. have recommended investors closing short positions in the S&P 500 and acquiring 10-year Treasury notes after inflation figures were revealed Thursday. The figures beat analysts’ estimates. 

According to the macro strategists, stable corporate earnings and rising cyclical stocks in comparison with defensive sector stocks mean that US stocks may rise further in the coming weeks.

As reported by them, the tactic of the game is changing. Given that there will be no major catalysts until early December, stocks could go up. 

US stocks usually surge for two months after the Consumer Price Index sees a decline. Stock market may be affected by next month's jobs and inflation data or the Fed's meeting in mid-December where an interest rate decision is made. According to Citi strategists, there are usually no bearish catalysts during this period.

Strategists recommend investors establishing long positions on US 10-year Treasuries as they will rise. The reason for the rally is that traders expect the blistering pace of policy tightening to slow. They prefer the Norwegian kroner to play on the weakening dollar.