Awaiting ‘Peak’ Trade Noise

August 2018

It seems that the news cycle has been as important as fundamentals in pricing financial assets. But, there comes a time when valuations get stretched too far and even though there has not been an improvement in the news flow/fundamentals, markets can rally. July was such a month. Risky assets rallied and risk free assets sold off. However, eventually prices cannot keep going up unless fundamentals improve and/or risks decline. August is looking like a critical juncture for both trade talks and the Italian budget. In other words, volatility may return. Our current strategy is to remain somewhat cautious, do not chase higher prices (lower yields) and wait for prices to reach attractive levels. We believe both economic and technical pressures point to higher U.S. Treasury yields, though we remain of the belief 10-year maturities will struggle to sustain yields much over 3% unless the rest of the global economy improves.

Global Fixed Income Team

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.

View Team

Awaiting ‘Peak’ Trade Noise

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.

CRC 2217284 Exp. 8/31/2019