Markets have been lulled into a false sense of calm and are unprepared for the impact of a seismic shift in Chinese economic policy, according to Saxo Bank chief economist Steen Jakobsen.

Statements from the Communist Party’s Politburo signaled that Chinese officials see the growth outlook improving, feeding speculation that Beijing may begin to scale back its stimulus package.

Jakobsen suggested that China’s change in focus from economic support to structural reform will result in a fade in outperformance of Chinese stocks, with the U.S. dollar and U.S. yields breaking higher.

“President Xi seems to be ‘happy’ with progress and performance, now shifting gears to consolidation from what we called ‘the global policy panic,’” he said.

“We are now entering ‘the false stabilization’, where policymakers go from stimulus to autopilot. This coincides with massive momentum divergence signals in China and also in U.S. stock markets, which of course make us sit up and take notice even more.”