M Update Global Macro Commentary | Global January 5Morgan Stanley & Co. LLCMartin W Tobias, CFAStrategist Martin.Tobias@morganstanley.com +1 212 761-6076 Zoe K StraussStrategist Zoe.Strauss@morganstanley.com +1 212 761-0407 Eli P CarterStrategist Eli.Carter@morganstanley.com +1 212 761-4703 Lenoy DujonUS/Canada Economist Lenoy.Dujon@morganstanley.com +1 212 761-2779 Morgan Stanley & Co. International plc+Marie-Anais C FrancoisStrategist Marie-Anais.Francois@morganstanley.com +44 20 7425-1877 Morgan Stanley Asia Limited+Gek Teng KhooStrategist Gek.Teng.Khoo@morganstanley.com +852 3963-0303 Contrasting labor market signals induce intraday market swings; DM duration ends a bumpy week on a low note; GBP shows mild outperformance amid construction PMI rise; CNH bucks regional weakness; BanRep's Bonilla guides to January cut and beyond; DXY at 102.44 (+0.0%); US 10y at 4.046% (+4.7bp).• Labor market data offers contrasting signals after December nonfarm payrolls show a still-tight labor market but the ISM services employment index plunges 7.4ppt into contraction.• Wide intraday trading ranges define a volatile session for USTs with the curve initially selling off in a roughly parallel manner, before bull-steepening, and eventually twist-steepening.• Bunds track the UST intraday swings before bear-flattening, with 10y Bund yields 13bp higher over the course of the week.• GBP (+0.3%) shows mild outperformance after a larger-than-expected rise in the UK construction PMI and gilt underperformance.• CNH (+0.1%) is an outlier from AxJ peers as solvency issues from a shadow bank were met with reports of state banks' activity in the FX markets over the past week.• BanRep board member and Colombian finance minister Bonilla expects the central bank to cut the policy rate by 25bp at their January meeting before accelerating the pace of cuts in March.Please refer to our recent publications and collaborations (Government Bond Auction Pipeline: The Month Ahead; Euro Inflation Watch: Just a Bump in a Downward Slope; EM Fixed Income Flows Update: Where Supply Meets Demand; Podcast: The Global Macro Guide: January 5). The main G10 central bank events in the week ahead are the release of SNB’s (Jan 9) Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision.For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.+= Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associated persons of the member and may not be subject to FINRA restrictions on communications with a subject company,...
