(Bloomberg) -- Citigroup Inc. macro strategists have recommended exiting a short position in the S&P 500 and buying 10-year Treasuries after Thursday’s better-than-expected inflation data.

Steady corporate earnings and a rally in cyclical stocks relative to defensive sectors suggest US shares have further scope to rally in the coming weeks, the strategists said in a note following Thursday’s consumer price index print.

“Tactically, the game is changing. With no solid catalysts from now until the beginning of December, equities can squeeze higher,” they said.

US stocks typically rally for two months after a downside CPI miss and until jobs and inflation reports next month or the Federal Reserve’s rate-setting meeting in mid-December, “it’s difficult to find any bearish catalysts” to temper the market, according to Citi.

The strategists recommend a long position in 10-year Treasuries, which will grind higher as traders reprice the likelihood of slowing rate hikes. The Norwegian kroner is their favored currency play for a weakening dollar.

“The most potent parts of the hiking cycle are likely now behind us and the rates market, along with prominent Fed watchers expect a slower pace of Fed hikes from here.”

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