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"We see this as a key step in Beijing's reflation efforts... It is a positive surprise for the market given the fading hopes on easing since mid-August," Morgan Stanley analysts said in a client note.

Haefele added that the main driver of the markets in the second half of 2022 will be investor perceptions of whether we are headed for stagflation, reflation, a soft-landing, or a slump.

Such an increase could stoke speculation that global inflation will prove longer-lasting than first hoped and hasten the end of super-cheap money, favouring reflation trades in bank and energy stocks while bruising bond prices.

The move may herald a nascent comeback for the so-called reflation trade, a bet on rebounding economic growth that saw value stocks surge starting late last year alongside Treasury yields.

Haefele is betting on the reflation trade - trades that outperform during periods of quick economic growth - as the world works through the Delta variant of the coronavirus.