M Update Global Macro Commentary | Global January 10Morgan 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 MUFG Securities Co., Ltd.+Koichi SugisakiStrategist Koichi.Sugisaki@morganstanleymufg.com +81 3 6836-8428 Morgan Stanley Asia Limited+Min DaiStrategist Min.Dai@morganstanley.com +852 2239-7983 Fed's Williams says point of slowing runoff is not close; USTs twist-steepen; JPY displays broad weakness after soft labor earnings; EUR gains, EGBs flatten after Schnabel comments; KRW falls with large equity outflows; IBR rates gain; DXY at 102.36 (-0.2%); US 10y at 4.028% (+1.5bp).• New York Fed President Williams cites "no signs of adverse effects on market functioning" from QT, and he does not believe the FOMC is close to the point of slowing its pace of asset runoff.• USTs twist-steepen in muted session ahead of December CPI; a strong result in the $37bn 10y re-opening auction is on display, with only a minor tail, before Thursday's first-tier risk event.• JPY exhibits broad-based weakness after total cash earnings decelerate significantly in November while real wages remain negative.• EUR/USD (+0.4%) rises and EGB curves flatten, with front-end underperformance, following comments by ECB Governing Council Member Schnabel that is it "too early to discuss rate cuts."• KRW falls 0.3%, to 1320 against USD, amid a decline in KOSPI and the largest foreign outflow from local equity markets in nearly two months.• IBR curve outperforms peers as the 2y rallies 17bp after the prior session's downside CPI surprise.Please refer to our latest Foundation (EM Sovereign 2024 Financing Outlook) as well as our recent publications and collaborations (EM Sovereign Credit Strategy: Rich & Cheap Watch).Developed MarketsUnited States: Proximity to a first-tier risk event in the form of December US CPI provided for an apprehensive tone across macro markets.In a session which lacked clear trends, the broad-based JPY weakness did clearly stand out after significant deceleration in Japanese nominal cash earnings sharply reduced odds of sooner BoJ normalization. Muted moves were on display across global duration, yet European curves did flatten – with front-end underperformance after ECB Governing Council Member Schnabel signaled it was premature to discuss 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 ...
