Morgan Stanley IM: What the Yield Curve and the Dollar Are Telling Us

Morgan Stanley IM: What the Yield Curve and the Dollar Are Telling Us
Fixed Income

Jim Caron, Co-Lead Global Portfolio Manager and Co-Chief Investment Officer, Global Balanced Risk Control Team, shares his macro thematic views on key market drivers.

19.04.2023 | 07:05 Uhr

  • This week we want to take a big picture macro look at two key drivers of longer-term market dynamics: the yields curve and the U.S. Dollar (USD).
  • From a U.S. domestic perspective the slope of the yield curve provides a market-based pricing of Fed policy, inflation and by extension GDP growth, economic conditions, labor, wages, etc.
  • From a global perspective it is important to look at the USD, which is always topical, but extremely hard to forecast given the many variables and co-dependencies.
  • The yield curve is priced to reverse much of its inversion/flattening and steepen going forward, and the USD is trending weaker. Both are macro signs of easier financial conditions or stimulus ahead.
  • But, the consensus narrative for a more negative outlook still prevails. What gives?

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Risk Considerations

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