Morgan_Stanley_Fixed-Global_Macro_Commentary_April_11-114668589_23页_1mb

Morgan Stanley Asia Global Macro Commentary - April 11, 2025

Key Highlights:

1. Risk Sentiment Recovery: US equities rebound amid optimistic trade deal rumors and Fed signals to stabilize the market. S&P 500 posts its largest weekly gain since 2023.
2. US Bond Market Flows:
   • UST curve bear- steepened (2y yields +30bps, 30y +50bps) amid rising inflation expectations and delayed FOMC easing.
   • Michigan Consumer Sentiment drops to 50.8 (lowest since 1981), with 1y inflation expectations reaching 6.7%. Front-end yields rise as market prices in aggressive data softening.
3. G10 Currency & EM Moves:
   • KRW strengthens against USD (+1.6%) due to export aid, outperforming despite KOSPI losses.
   • DXY declines (-1.0%) as USD weakens, but commodity currencies (AUD, CAD) gain against G10.
   • EM currencies improve broadly, with CNH lagging amid PBOC liquidity intervention. IDR undervalued due to external financing needs.
4. EM Sovereign Risk: Brazil’s IPCA inflation slows but electricity tariffs drag lower food inflation. Mexico’s industrial output improves but exports remain weak.
5. Fed Policy Notes: FOMC members emphasize policy is "well positioned" to delay easing amid persistent inflation. Dovish vs hawkish signals conflicting in front-line equities vs bonds.

Market Outlook:

• Favor G4 Duration: Tactical strategies long German and US 10y bonds.
• DXY Overweight: Weak USD expected as US yields fail to drive positive carry.
• EM Markets: Monitor central bank interventions and inflation in Brazil, India, and Turkey.