Morgan Stanley Fixed-Global Macro Commentary May 28-108436151.pdf

M234ExhiGlobalMacroCommentary|NorthAmericaMay28MorganStanley&Co.LLCAlexandraMaierStrategistAlexandra.Maier@morganstanley.com+1212761-0428MartinWTobias,CFAStrategistMartin.Tobias@morganstanley.com+1212761-6076ZoeKStraussStrategistZoe.Strauss@morganstanley.com+1212761-0407LenoyDujonUS/CanadaEconomistLenoy.Dujon@morganstanley.com+1212761-2779MorganStanley&Co.Internationalplc+Marie-AnaisCFrancoisStrategistMarie-Anais.Francois@morganstanley.com+44207425-1877MorganStanleyMUFGSecuritiesCo.,Ltd.+HiromuUezatoResearchAssociateHiromu.Uezato@morganstanleymufg.com+8136836-8431MorganStanleyAsiaLimited+GekTengKhooStrategistGek.Teng.Khoo@morganstanley.com+8523963-0303USconsumersentimentunexpectedlyrises;USTauctionstail;ECB"sKnotexpectsratecutswill"soonbeappropriate";PHPgainsamidmonetarypolicyreport;BoJ"sUchida"swarningweighsonJGBs;Fed"sKashakarisayshikesareonthetable.DXYat104.63(-0.1%);US10yat4.550%(+8.5bp).•3b2t1567618629:702t1UST672t15y06186unexpectedlyrisesafterthreeconsecutivedeclines,sendingUSTyieldshigherandhelpingthe3b20DD:72recoverfromovernightlosses.•B76:US7y6U2extendlossesasRK2:102JK2:S8Gy1U2aremetwithlowdemand,resultingintailsof1.0bpand1.3bp,respectively,leavingdealerswithhigherallotmentsthanrecentaverages.•AS7C6:120S7:Gy1cheapensalongsidetheUS,despiteAt92NZ671y1X2tS18yD2Y6TP672H1G2sayingitwill“soonbeappropriate”toeasetherestrictivepolicyrate;marketpricingimpliesover93%chanceofaratecutinJune.•%&%M(+0.3%)gainsas9bF2T16G:7K2CDy8K276C7G2statesUSD/PHPcouldremainwithinthe55-58rangein2024and2025.•Remarksfrom9L2M6CSGK2NZ6717238Iy0:22222222222222warningthat“thistimeisdifferent”continuetoweighonJGBs;2WVK2LN9U2selloffby0.6bpto1.03%.•Yy116:CDyU2a602F76Uy061G2H:UIe:7ysayspolicymakershavenottakenratehikesoffthetableandhewouldnotpencilinmorethantwocutsin2024.Pleaserefertoourrecentpublicationsandcollaborations(GlobalMacroStrategy:GlobalFXPositioning:StretchedLongEUR/JPYPositions;EMSovereignCreditStrategyUpdate:ParingBackPemex;EMCreditBrief:NewSaudiArabia3Y/6Y/10YSukukIssuanceThoughts).M6Z6DC602Y:7e6GUUnitedStates:USTsMretracedearlyNYmorninggainsafterstrongeconomicdataandhawkishFedspeak,andsteepenedpersistentlythroughouttheNYsession.MinneapolisFedPresidentKashkaristatedthatwhiletheFed’spolicyrateisrestrictive,FOMCmembershavenottakenrateincreasesoffthetable,andhewouldnotexpectmoreMorganStanleydoesandseekstodobusinesswithcompaniescoveredinMorganStanleyResearch.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofMorganStanleyResearch.InvestorsshouldconsiderMorganStanleyResearchasonlyasinglefactorinmakingtheirinvestmentdecision.Foranalystcertificationandotherimportantdisclosures,refertotheDisclosureSection,locatedattheendofthisreport.+=Analystsemployedbynon-U.S.affiliatesarenotregisteredwithFINRA,maynotbeassociatedpersonsofthememberandmaynotbesubjecttoFINRArestrictionsoncommunicationswithasubjectcompany,publicappearancesandtradingsecuritiesheldbyaresearchanalystaccount.May28,202411:18PMGMTMUpdate2thantwocutsin2024,whichsent