Global Fixed Income Bulletin
Ranges Are Meant to be Broken
 
 

Global Fixed Income Bulletin

Ranges Are Meant to be Broken

 

May 2018

By the end of April, markets – government bonds, credit and equities – were consolidating around current levels as recent economic data is digested. With the exception of the U.S., there has been a notable decline in economic growth indicators since the beginning of the year. Although the latest readings are still consistent with the global economy growing at a healthy rate, markets have begun to worry about the sustainability of the low inflation/strong growth narrative. On the back of this wariness, 10-year U.S. Treasuries have settled into a 2.80-3.00 percent range. The market’s split mind is evidenced by its unwillingness to push U.S. 10-year yields above 3 percent, the post-crisis high previously achieved in early 2014. In other words, will the U.S./global economy break out of its 2007-2017 range (i.e., ending secular stagnation) or will the global economy drift back to mediocrity (or worse) in the year(s) ahead. While the better earnings and economic data have not pushed credit spreads tighter, they have helped them stabilize around current levels. However, the risk is new economic data (better or worse) could force the market to revise its expectations again. As they say, ranges are meant to be broken.

 
 
The Global Fixed Income team follows a seamless process with a global outlook. They seek to identify and capture the potential value in situations where the market's implied forecasts are extreme.
 
 
 

 

The views and opinions are those of the author as of the date of publication and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. The views expressed do not reflect the opinions of all investment personnel at Morgan Stanley Investment Management (MSIM) or the views of the firm as a whole, and may not be reflected in all the strategies and products that the Firm offers.

This general communication, which is not impartial, is for informational and educational purposes only, not a recommendation. Information does not address financial objectives, situation or specific needs of individual investors.

Any charts and graphs provided are for illustrative purposes only. Any performance quoted represents past performance. Past performance does not guarantee future results. All investments involve risks, including the possible loss of principal.

Prior to making any investment decision, investors should carefully review the strategy’s/product’s relevant offering document. For the complete content and important disclosures, refer to the link above.

It is important that users read the Terms of Use before proceeding as it explains certain legal and regulatory restrictions applicable to the dissemination of information pertaining to Morgan Stanley Investment Management's investment products.

The services described on this website may not be available in all jurisdictions or to all persons. For further details, please see our Terms of Use.

Not FDIC Insured—Offer No Bank Guarantee—May Lose Value
Not Insured By Any Federal Government Agency—Not A Deposit

Privacy & Cookies    •    Terms of Use

©  Morgan Stanley. All rights reserved.

Morgan Stanley Distribution, Inc. Member FINRA/SIPC.