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Global Fixed Income Bulletin
July 16, 2021

Where Is All the Yield Going?

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July 16, 2021

Where Is All the Yield Going?

Global Fixed Income Bulletin

Where Is All the Yield Going?

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July 16, 2021


June turned out to be nothing like May. Indeed, it was a remarkable month with yields continuing to fall, credit spreads tightening and equities rallying despite ostensibly bearish data/news. With economies and corporate results strong, it is logical that credit and equity markets do fine. But, if everything is good macro-economically—and likely to stay good for at least another year—why are yields falling? The answer lies in expectations, market positioning and the Federal Reserve (Fed). And, maybe most importantly, the search for yield in an income starved world.

The key June event was the Fed’s mid-month Federal Open Market Committee (FOMC) meeting. The Fed signaled (via its dot-plot) a lift-off for policy rates in 2023, with the median expectation from committee members for two rate hikes, which is earlier than previously communicated at its March meeting. While Chairman Powell downplayed the change in the dots, stating that they would not change the Fed’s policy forecast until the FOMC saw “further substantial progress”, and that “liftoff is well into the future,” the tone of the press conference, the number of FOMC participants who brought forward their first hike expectations and the hawkish communications by President Kaplan of the Dallas Fed and President Bullard of the St. Louis Fed, among others, convinced the market that policy preferences had meaningfully changed. Maybe Flexible Average Inflation Targeting (FAIT) was already done!


The truly remarkable impact the Fed meeting had was on the shape of the U.S. yield curve and inflation expectations. In the 48 hours after the meeting (Wednesday to Friday) 30-year U.S. Treasury yields fell 19 basis points (bps) while the U.S. Treasury 5-year yield fell only 2bps. This belies the true volatility, as the markets traded chaotically post press release on Wednesday June 16. It is very, very unusual for long maturity yields to fall and the curve to twist/flatten like this before the Fed has even begun to raise rates. In addition, over the second  half of the month, the forward yield curve between 5-year and 30-year yields almost went to zero, which historically has not happened until the Fed has almost finished tightening! Moreover, even though the Fed did not indicate that it would increase the cumulative amount of tightening over the cycle (e.g., the terminal Fed funds rate remained unchanged), the market believed the terminal rate would now be lower than before the meeting. Despite inflation surprising to the upside, inflation expectations, as measured by U.S. breakeven inflation rates, fell. Even more astonishingly, this dynamic played out in other countries as well.

Clearly, the Fed’s actions, although a surprise, was unlikely powerful enough to unleash the market moves witnessed. Other factors which contributed to the rally in government bond yields include: market positioning, particularly among speculative investors; concerns over growth slowdown in U.S.; the COVID delta variant and its implications; speculation that the neutral policy rate (i.e., r*) may have shifted lower; and excess liquidity/ savings. We believe worries about growth will subside; the delta variant will not derail economies normalizing given reduced hospitalization and mortality rates with growing vaccination levels; and, market technicals will stabilize (they always have). On the other hand, excess liquidity/savings might be here for a while, and it remains to be seen if r* has moved meaningfully, although it’s difficult to identify any data which supports such a change in view.

Credit and equity markets were fairly nonchalant by all of the hoopla in the government bond markets. Both IG and HY spreads continued to tighten, seemingly somewhat impervious to other forces, continuing to make new lows. If the Treasury market was signaling trouble ahead, risk markets were not listening. As we believe economic data will stay strong (meaningfully above trend) and inflation will not prove to be a problem, market worries about growth deceleration and the possibility of the Fed making a policy error by moving to tighten policy too soon look wrong, in our view. The global economy is doing better.

Display 1: Asset Performance Year-to-Date

Note: USD-based performance. Source: Bloomberg. Data as of June 30, 2021. The indexes are provided for illustrative purposes only and are not meant to depict the performance of a specific investment. Past performance is no guarantee of future results. See below for index definitions

Display 2: Currency Monthly Changes Versus U.S. Dollar

Note: Positive change means appreciation of the currency against the USD. Source: Bloomberg. Data as of June 30, 2021.

Display 3: Major Monthly Changes in 10-Year Yields and Spreads

Source: Bloomberg, JPMorgan. Data as of June 30, 2021.


Fixed Income Outlook  

Despite all the Sturm und Drang of market action and confusing news flow in June (inflation, employment, supply bottlenecks), we do not believe there are big investment implications beyond the fact that risk-free government yields are getting as low as they likely can without a fundamental rethink about the trajectory of economies and policy responses. Looking at the facts, we can see business outlooks and confidence surveys at high levels; strong employment growth; strong productivity growth (no sign in margin squeezes); strong economic growth (as measured by GDP); easy monetary policy (U.S. financial conditions continue to set new levels of easiness) despite worries about the Fed and other, particularly EM, central banks tightening policy; and easy fiscal policy, at least in Europe and the U.S. While policy actions will not continue forever, U.S. supplemental unemployment benefits are slowly expiring, household and corporate balance sheets are flush, almost never stronger. An indication of how flush is the ratio of bank deposits to loans on bank’s balance sheets. Currently deposits are greater than bank credit! The need to borrow is low. And, deposit growth is twice as high as credit growth. Household savings rates are at very high levels, providing ample ammunition to fund strong spending for the next few years; ditto for corporations.

This leads to a critical question. Will savings built up over the pandemic be spent? As policy support inevitably fades, even if slowly, will private sector spending pick up the slack? Most likely yes, allowing the economic expansion to remain strong (albeit at lower levels than 2021) and continuing through 2022, pushing the U.S. economy to over full employment at sometime late this year or early next year. With U.S. financial conditions at historical easy levels and European levels moving in that direction, it seems unlikely that the economic cycle is anywhere near its end point. Indeed, with office workers just beginning to trickle back to office buildings, it seems perverse to think we are near the end of the cycle.

Despite the ongoing rally in credit markets, we believe a sanguine view remains appropriate. Strong economic data (even if decelerating, as U.S. H1 growth is unsustainable), strong corporate revenue and robust balance sheets remain quite supportive despite high valuations. Historically, we have seen credit spreads, both IG and HY, remain on the expensive side of average for long periods of time, especially when economic growth is this strong and monetary tightening is still far away. Moreover, with government bond yields still negative in much of the world, the search for yield is not likely to abate in any significant way. That said, it is dangerous to completely ignore valuations, so we continue to advocate a selective approach, looking for companies that will thrive in the post-pandemic world and not engage in too much creditor unfriendly activities. We do expect companies, in general, to be a bit more conservative in cash flow/balance sheet management after the searing pandemic experience in 2020.

The rally in government bonds is fast approaching levels which look too low relative to a sanguine view of the future. U.S. Treasury 10-year real yields are back near -1%, not far from lows seen in May or even during depths of despair in February 2020. This is not sustainable unless we are returning to a secularly stagnant world even worse than experienced prior to the pandemic. This could happen if the COVID epidemic has left permanent scarring on the economy, causing potential growth rates to be lower and hence also lowering the neutral policy rate to which central banks look to raise rates over time. Easier monetary policy is required to achieve the same growth and inflation rates that prevailed pre-pandemic. Japanification would be an apt description, where household savings stay high. Governments drop helicopter money (think MMT) and households and corporates recycle it back into bank deposits. Real yields and inflation are low; government debt is high; employment is high, but wage growth is low and growth anemic. We do not think this is going to happen to the U.S., China or EM (Europe remains a work in progress) but vigilance is required to monitor developments on the policy and private sector behavior fronts to make sure, the policy rug is not pulled out from under economies and the private sector remains confident enough about the future to increase spending and reduce abnormally high (by the standard of normal times) savings. 10-year U.S. Treasury yields look too low at 1.2%, as do 10-year German government bonds at yields lower than -0.4%. Duration management in the second half of the year may be critical to generating positive returns.

The bottom line is that an investment strategy focused on a continuation of low nominal (and in particular real) yields, strong growth (in output and incomes), rising vaccination rates, and stable policy remains intact. While it is difficult to believe that global developed market yields will not go higher eventually, we should not count on it happening in the very short term, given technical and liquidity dynamics at work (summer liquidity and of course the August curse when things seem always to go haywire somewhere in the world). Credit spreads should remain well supported but higher quality bonds will struggle to tighten further; widening should be a buying opportunity given the medium term outlook. Cyclical assets should continue to outperform, as we have seen CCC rated bonds do in recent weeks and months. Selective emerging markets and securitized credit remain attractive. As we have discussed before, the dollar remains a bellwether of where the global economy is going: weaker is good/stronger is bad.


Developed Market (DM) Rate/Foreign Currency (FX)

Monthly Review

In June, 10-year yields fell across the developed markets, despite continued strong economic data and muted volatility. In the U.S., the yield curve flattened meaningfully as rate hike expectations are forecasted to be sooner than previously thought following a hawkish shift in tone from the Fed at its June meeting, but the terminal, or neutral, policy rate is now being priced to be lower. U.S. 10-year breakeven inflation fell over the month, although investor concern around rising inflation remained. As vaccination roll-out continued to accelerate across the EU, the ECB presented a more positive outlook to the region’s economy at its June meeting. The ECB upgraded its GDP and inflation projections, while also viewing the increase in inflation as transitory. The Bank of England kept rates and asset purchases unchanged at its June meeting, despite rising inflation and stronger than expected GDP growth; the market interpreted the meeting as dovish due to the committee communicating it doesn’t plan to raise rates for quite some time still.


Falling infection rates, vaccine rollouts and strong efficacy results, massive U.S. fiscal stimulus, high savings rates, economic re-openings and dovish central banks are buttressing a very positive outlook for economies for the second half of this year. With the $1.9 trillion support/stimulus package being implemented, U.S. fiscal policy is on a trajectory to significantly improve 2021/2022 growth globally, not just in the U.S.  With a second, infrastructure package also likely to be discussed in the fall, probably worth at least another $1 trillion, the tailwind for the U.S. and global economy is strong, even with an upward trend in yields seen so far this year.

While we do not expect a dramatic sell-off in government bond markets, we think the risk is skewed to yields rising, as valuations are now considerably richer than they were two months’ ago. The recent price action only makes fundamental sense if one believes the neutral policy rate, r*, has shifted considerably lower post-pandemic. While it is possible this has happened, it will take time for it to be proven one way or the other, and we do not see what new data have emerged to cause investors to become bearish about long term growth. The current surge in inflation is expected to be transitory but there is a risk it becomes more persistent due to higher wages and inflation expectations. The fact that real yields remain close to all-time lows suggests financial conditions remain very accommodative.

Emerging Market (EM) Rate/FX                                        

Monthly Review

EM debt returns were mixed in June. Hard currency sovereigns delivered strong returns, predominantly driven by lower U.S. Treasury yields. EM Corporates were also positive for the month, according to the JPM CEMBI Broad Diversified Index, with high yield outperforming investment grade corporates Local currency bonds posted negative returns, due to weaker EM currencies versus the U.S. dollar. From a sectoral perspective, companies in the Transport, Oil & Gas, TMT and Utilities led the market, while those in the Real Estate, Financial, Industrial and Consumer sectors underperformed.


We remain generally constructive on EM Fixed Income assets in the weeks ahead on the back of continued stability in UST yields, a steady movement towards reopening in developed markets, and a pickup in vaccination rates in several EM economies.


Monthly Review

Credit spreads over the month ground tighter in Euro and U.S. IG. Credit markets also benefitted from slightly higher equities and lower volatility in the month. Curves flattened as long-dated paper outperformed. Supply picked up in the month ahead of the summer with $24.0bn in Corporates and $30.0bn in Financials (of which $10bn was in REITs) taking gross issuance YTD to $327bn.1

Market Outlook

We remain constructive on credit, and see the asset class supported by a few key factors. Firstly, there remains expectations of an economic rebound in 2021. This will be facilitated by continued positive support from monetary and fiscal policy as rates stay accommodative and QE creates strong demand. We expect corporates to maintain conservative strategies until the real economy normalises. Finally, we expect continued demand for credit in general, if risk-free assets continue to offer negative real and absolute yields.

Securitized Products

Monthly Review

June experienced active new issuance, quiet secondary trading activity and relatively low market volatility. Interest rates remained largely range-bound, and the curve flattened meaningfully as expectations of potential Fed rate hikes were pulled forward.


Credit fundamentals remain strong in the residential and consumer sectors of the securitized markets, while commercial real estate continues to face some remaining pandemic-induced stress.  We continue to have a positive outlook on residential and consumer credit sectors and a more cautious view on commercial mortgage backed securities (CMBS).


1 Source: Bloomberg, as of June 30, 2021



Diversification neither assures a profit nor guarantees against loss in a declining market.

There is no assurance that a portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that the market values of securities owned by the portfolio will decline and that the value of portfolio shares may therefore be less than what you paid for them. Market values can change daily due to economic and other events (e.g. natural disasters, health crises, terrorism, conflicts and social unrest) that affect markets, countries, companies or governments. It is difficult to predict the timing, duration, and potential adverse effects (e.g. portfolio liquidity) of events. Accordingly, you can lose money investing in a portfolio. Fixed-income securities are subject to the ability of an issuer to make timely principal and interest payments (credit risk), changes in interest rates (interest rate risk), the creditworthiness of the issuer and general market liquidity (market risk). In a rising interest-rate environment, bond prices may fall and may result in periods of volatility and increased portfolio redemptions. In a declining interest-rate environment, the portfolio may generate less income. Longer-term securities may be more sensitive to interest rate changes. Certain U.S. government securities purchased by the strategy, such as those issued by Fannie Mae and Freddie Mac, are not backed by the full faith and credit of the U.S. It is possible that these issuers will not have the funds to meet their payment obligations in the future. Public bank loans are subject to liquidity risk and the credit risks of lower-rated securities. High-yield securities (junk bonds) are lower-rated securities that may have a higher degree of credit and liquidity risk. Sovereign debt securities are subject to default risk. Mortgage- and asset-backed securities are sensitive to early prepayment risk and a higher risk of default, and may be hard to value and difficult to sell (liquidity risk). They are also subject to credit, market and interest rate risks. The currency market is highly volatile. Prices in these markets are influenced by, among other things, changing supply and demand for a particular currency; trade; fiscal, money and domestic or foreign exchange control programs and policies; and changes in domestic and foreign interest rates. Investments in foreign markets entail special risks such as currency, political, economic and market risks. The risks of investing in emerging market countries are greater than the risks generally associated with foreign investments. Derivative instruments may disproportionately increase losses and have a significant impact on performance. They also may be subject to counterparty, liquidity, valuation, and correlation and market risks. Restricted and illiquid securities may be more difficult to sell and value than publicly traded securities (liquidity risk). Due to the possibility that prepayments will alter the cash flows on collateralized mortgage obligations (CMOs), it is not possible to determine in advance their final maturity date or average life. In addition, if the collateral securing the CMOs or any third-party guarantees are insufficient to make payments, the portfolio could sustain a loss.

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.
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R* is the real short term interest rate that would occur when the economy is at equilibrium, meaning that unemployment is at the neutral rate and inflation is at the target rate. Basis point: One basis point = 0.01%.


The indexes shown in this report are not meant to depict the performance of any specific investment, and the indexes shown do not include any expenses, fees or sales charges, which would lower performance. The indexes shown are unmanaged and should not be considered an investment. It is not possible to invest directly in an index.

The Bloomberg Barclays Euro Aggregate Corporate Index (Bloomberg Barclays Euro IG Corporate) is an index designed to reflect the performance of the euro-denominated investment-grade corporate bond market.

The Bloomberg Barclays Global Aggregate Corporate Index is the corporate component of the Barclays Global Aggregate index, which provides a broad-based measure of the global investment-grade fixed income markets.

The Bloomberg Barclays U.S. Corporate Index (Bloomberg Barclays U.S. IG Corp) is a broad-based benchmark that measures the investment-grade, fixed-rate, taxable corporate bond market.

The Bloomberg Barclays U.S. Corporate High Yield Index measures the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below. The index excludes emerging market debt.

The Bloomberg Barclays U.S. Corporate Index is a broad-based benchmark that measures the investment grade, fixed-rate, taxable, corporate bond market. The Bloomberg Barclays U.S. Corporate Index is a broad-based benchmark that measures the investment grade, fixed-rate, taxable, corporate bond market.

The Bloomberg Barclays U.S. Mortgage Backed Securities (MBS) Index tracks agency mortgage-backed pass-through securities (both fixed-rate and hybrid ARM) guaranteed by Ginnie Mae (GNMA), Fannie Mae (FNMA) and Freddie Mac (FHLMC). The index is constructed by grouping individual TBA-deliverable MBS pools into aggregates or generics based on program, coupon and vintage. Introduced in 1985, the GNMA, FHLMC and FNMA fixed-rate indexes for 30- and 15-year securities were backdated to January 1976, May 1977 and November 1982, respectively. In April 2007, agency hybrid adjustable-rate mortgage (ARM) pass-through securities were added to the index.

Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care.

Euro vs. USD—Euro total return versus U.S. dollar.

German 10YR bonds—Germany Benchmark 10-Year Datastream Government Index; Japan 10YR government bonds —Japan Benchmark 10-Year Datastream Government Index; and 10YR U.S. Treasury—U.S. Benchmark 10-Year Datastream Government Index.

The ICE BofAML European Currency High-Yield Constrained Index (ICE BofAML Euro HY constrained) is designed to track the performance of euro- and British pound sterling-denominated below investment-grade corporate debt publicly issued in the eurobond, sterling

The ICE BofAML U.S. Mortgage-Backed Securities (ICE BofAML U.S. Mortgage Master) Index tracks the performance of U.S. dollar-denominated, fixed-rate and hybrid residential mortgage pass-through securities publicly issued by U.S. agencies in the U.S. domestic market.

The ICE BofAML U.S. High Yield Master II Constrained Index (ICE BofAML U.S. High Yield) is a market value-weighted index of all domestic and Yankee high-yield bonds, including deferred-interest bonds and payment-in-kind securities. Its securities have maturities of one year or more and a credit rating lower than BBB-/Baa3, but are not in default.

The ISM Manufacturing Index is based on surveys of more than 300 manufacturing firms by the Institute of Supply Management. The ISM Manufacturing Index monitors employment, production inventories, new orders and supplier deliveries. A composite diffusion index is created that monitors conditions in national manufacturing based on the data from these surveys.

Italy 10-Year Government Bonds—Italy Benchmark 10-Year Datastream Government Index.

The JP Morgan CEMBI Broad Diversified Index is a global, liquid corporate emerging markets benchmark that tracks U.S.-denominated corporate bonds issued by emerging markets entities.

The JPMorgan Government Bond Index—emerging markets (JPM local EM debt) tracks local currency bonds issued by emerging market governments. The index is positioned as the investable benchmark that includes only those countries that are accessible by most of the international investor base (excludes China and India as of September 2013).

The JPMorgan Government Bond Index Emerging Markets (JPM External EM Debt) tracks local currency bonds issued by emerging market governments. The index is positioned as the investable benchmark that includes only those countries that are accessible by most of the international investor base (excludes China and India as of September 2013).

The JP Morgan Emerging Markets Bond Index Global (EMBI Global) tracks total returns for traded external debt instruments in the emerging markets and is an expanded version of the EMBI+. As with the EMBI+, the EMBI Global includes U.S. dollar-denominated Brady bonds, loans and eurobonds with an outstanding face value of at least $500 million.

The JP Morgan GBI-EM Global Diversified Index is a market-capitalization weighted, liquid global benchmark for U.S.-dollar corporate emerging market bonds representing Asia, Latin America, Europe and the Middle East/Africa.

JPY vs. USD—Japanese yen total return versus U.S. dollar.

The National Association of Realtors Home Affordability Index compares the median income to the cost of the median home.

The Nikkei 225 Index (Japan Nikkei 225) is a price-weighted index of Japan’s top 225 blue-chip companies on the Tokyo Stock Exchange.

The MSCI AC Asia ex-Japan Index (MSCI Asia ex-Japan) captures large- and mid-cap representation across two of three developed markets countries (excluding Japan) and eight emerging markets countries in Asia.

The MSCI All Country World Index (ACWI, MSCI global equities) is a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends.

MSCI Emerging Markets Index (MSCI emerging equities) captures large- and mid-cap representation across 23 emerging markets (EM) countries.

The MSCI World Index (MSCI developed equities) captures large and mid-cap representation across 23 developed market (DM) countries.

Purchasing Managers Index (PMI) is an indicator of the economic health of the manufacturing sector.

The Russell 2000® Index is an index that measures the performance of the 2,000 smallest companies in the Russell 3000 Index.

The S&P 500® Index (U.S. S&P 500) measures the performance of the large-cap segment of the U.S. equities market, covering approximately 75 percent of the U.S. equities market. The index includes 500 leading companies in leading industries of the U.S. economy.

The S&P/LSTA U.S. Leveraged Loan 100 Index (S&P/LSTA Leveraged Loan Index) is designed to reflect the performance of the largest facilities in the leveraged loan market.

The S&P GSCI Copper Index (Copper), a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the copper commodity market.

The S&P GSCI Softs (GSCI soft commodities) Index is a sub-index of the S&P GSCI that measures the performance of only the soft commodities, weighted on a world production basis. In 2012, the S&P GSCI Softs Index included the following commodities: coffee, sugar, cocoa and cotton.

Spain 10-Year Government Bonds—Spain Benchmark 10-Year Datastream Government Index.

The Thomson Reuters Convertible Global Focus USD Hedged Index is a market weighted index with a minimum size for inclusion of $500 million (U.S.), 200 million euro (Europe), 22 billion yen, and $275 million (Other) of convertible bonds with an equity link.

U.K. 10YR government bonds—U.K. Benchmark 10-Year Datastream Government Index. For the following Datastream government bond indexes, benchmark indexes are based on single bonds. The bond chosen for each series is the most representative bond available for the given maturity band at each point in time. Benchmarks are selected according to the accepted conventions within each market. Generally, the benchmark bond is the latest issue within the given maturity band; consideration is also given to yield, liquidity, issue size and coupon.

The U.S. Dollar Index (DXY) is an index of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of U.S. trade partners’ currencies.

The Chicago Board Options Exchange (CBOE) Market Volatility (VIX) Index shows the market’s expectation of 30-day volatility.


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There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. Prior to investing, investors should carefully review the strategy’s / product’s relevant offering document. There are important differences in how the strategy is carried out in each of the investment vehicles.

A separately managed account may not be appropriate for all investors.

Separate accounts managed according to the Strategy include a number of securities and will not necessarily track the performance of any index. Please consider the investment objectives, risks and fees of the Strategy carefully before investing.

The views and opinions are those of the author or the investment team as of the date of preparation of this material and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. Furthermore, the views will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring, after the date of publication. The views expressed do not reflect the opinions of all investment teams 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.

Forecasts and/or estimates provided herein are subject to change and may not actually come to pass. Information regarding expected market returns and market outlooks is based on the research, analysis and opinions of the authors. These conclusions are speculative in nature, may not come to pass and are not intended to predict the future performance of any specific Morgan Stanley Investment Management product.

Certain information herein is based on data obtained from third party sources believed to be reliable. However, we have not verified this information, and we make no representations whatsoever as to its accuracy or completeness.

This communication is not a product of Morgan Stanley’s Research Department and should not be regarded as a research recommendation. The information contained herein has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This material is a general communication, which is not impartial and has been prepared solely for informational and educational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. All investments involve risks, including the possible loss of principal. The information herein has not been based on a consideration of any individual investor circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.

Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor. Any product based on an index is in no way sponsored, endorsed, sold or promoted by the applicable licensor and it shall not have any liability with respect thereto.

MSIM has not authorised financial intermediaries to use and to distribute this document, unless such use and distribution is made in accordance with applicable law and regulation. Additionally, financial intermediaries are required to satisfy themselves that the information in this document is appropriate for any person to whom they provide this document in view of that person’s circumstances and purpose. MSIM shall not be liable for, and accepts no liability for, the use or misuse of this document by any such financial intermediary.

This document may be translated into other languages. Where such a translation is made this English version remains definitive. If there are any discrepancies between the English version and any version of this document in another language, the English version shall prevail.

The whole or any part of this work may not be directly or indirectly reproduced, copied, modified, used to create a derivative work, performed, displayed, published, posted, licensed, framed, distributed, or transmitted or any of its contents disclosed to third parties without MSIM’s express written consent. The work may not be linked to unless such hyperlink is for personal and non-commercial use. All information contained herein is proprietary and is protected under copyright law.

Morgan Stanley Investment Management is the asset management division of Morgan Stanley.


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