Morgan Stanley Fixed-Global Macro Commentary May 31-108470577.pdf

M234ExhiGlobalMacroCommentary|NorthAmericaMay31MorganStanley&Co.LLCAlexandraMaierStrategistAlexandra.Maier@morganstanley.com+1212761-0428ZoeKStraussStrategistZoe.Strauss@morganstanley.com+1212761-0407LenoyDujonUS/CanadaEconomistLenoy.Dujon@morganstanley.com+1212761-2779MorganStanleyMUFGSecuritiesCo.,Ltd.+HirokiYagiResearchAssociateHiroki.Yagi1@morganstanleymufg.com+8136836-5412MorganStanleyAsiaLimited+GekTengKhooStrategistGek.Teng.Khoo@morganstanley.com+8523963-0303SoftCanadian1Q24GDPsendsyieldslower;USTsrallyamidinlinePCEdata;JPYcontinuestofallalongsideJapanMoFinterventiondata;PHPoutperforms;USD/CADfallsdespiteyielddifferentials;S&Pendsthemonthwithgains;DXYat104.61(-0.1%);US10yat4.499%(-4.8bp).•Downsidesurprisein2bt125676896720:U2sends567689672STyDB7RD7K2JT78Glower(2y:-9bp);market-impliedpricingforJuneBoCshiftslowerandimpliesover80%probabilityofacutatnextweek’sBoCmeeting.•3ACGrallyasNZB9X2U5Y2isinlinewithexpectationswithsofterpersonalspendingandconfirmsinflationarypressuresaredeceleratingrelativetothestrong1Q24data.•P6Z672HTF286K6showsJapanspentJPY9.8trillioninFXinterventioninMay,exceedingtheamountof2022’sintervention;3A:OPULrises0.3%to157.24,abovelevelswherepotentialinterventionoccurred.•UMU2(+0.2%)outperformsamidIAU222222222commentsthatPHPweaknesswasoneofthekeydriversofinflationinMay.•:WL23A:2V78Da2(-0.1%)followsUSrateslowerafterweaker-than-expecteddata;3A:O5N:(-0.4%)fallsdespiteyielddifferentialsfurthermovingintheUSD’sfavor.•Afterfallingover1.0%intraday,2AeU2woo2(+0.8%)spikesinthefinal20minutesoftradingandendsMaywithlargestmonthlygainsinceFebruary.PleaserefertoourlatestFoundations(GlobalEMFixedIncomeMid-YearOutlook;CanadaEconomics&GlobalMacroStrategyMid-YearOutlook)aswellasourrecentpublicationsandcollaborations(GovernmentBondAuctionPipeline:TheMonthAhead;EMFixedIncomeFlowsUpdate:WhereSupplyMeetsDemand;China:SnippetsfromChina;Podcast|TheGlobalMacroGuide:May31).MorganStanleydoesandseekstodobusinesswithcompaniescoveredinMorganStanleyResearch.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofMorganStanleyResearch.InvestorsshouldconsiderMorganStanleyResearchasonlyasinglefactorinmakingtheirinvestmentdecision.Foranalystcertificationandotherimportantdisclosures,refertotheDisclosureSection,locatedattheendofthisreport.+=Analystsemployedbynon-U.S.affiliatesarenotregisteredwithFINRA,maynotbeassociatedpersonsofthememberandmaynotbesubjecttoFINRArestrictionsoncommunicationswithasubjectcompany,publicappearancesandtradingsecuritiesheldbyaresearchanalystaccount.May31,202410:38PMGMTMUpdate2ThemainG10centralbankeventsintheweekaheadareMonetaryPolicyMeetingsfortheBoC(Jun5)andECB(Jun6).SelectedscheduledG10centralbankspeakingengagementsincludeRiksbankDeputyGovernorBreman(Jun4),BoJBoardMemberNakamura(Jun6),ECBGoverningCouncilMemberNagel(Jun7),ECBExecutiveBoardMemberSchnabel(Jun7),andECBPresidentLagarde(Jun7).InEM,aMonetaryPolicyMeetingisscheduledforNBP(Jun5).PMIs(Jun3:Switzerland,Italy,France,Germany,Norway,EuroArea,U