M Update Global Macro Commentary | Global January 26Morgan Stanley & Co. LLCMartin W Tobias, CFAStrategist Martin.Tobias@morganstanley.com +1 212 761-6076 Morgan Stanley & Co. International plc+Dominic J KrummenacherStrategist Dominic.Krummenacher@morganstanley.com +44 20 7425-9781 Morgan Stanley & Co. LLCEli 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+Gek Teng KhooStrategist Gek.Teng.Khoo@morganstanley.com +852 3963-0303 Mild UST twist flattener ensues, spending comes in strong; ECB's Vujcic urges patience on rate cuts, EUR retraces losses; USD/CNH remains isolated from equity vol; JGBs rally after weak Tokyo CPI; CLP weakens sharply after FinMin pauses USD sales; DXY at 103.47 (-0.1%); US 10y at 4.137% (+1.9bp).• A mild UST twist flattener partially reverses the prior session's bull-steepening after slighter weaker core PCE of 0.17% m/m (C: 0.2%) pares with strong personal spending, with upward revisions.• ECB Governing Council Member Vujcic says “we need patience at the moment to get enough data to be confident that inflation is really firmly sustainably on the way to our medium-term target.”• More explicit pushback against market pricing of rate cuts from ECB policymakers provides a slight boost to EUR (+0.1%).• USD/CNH (+0.1%) is little changed despite further local equity market volatility (Hang Seng: -1.6%). • The belly of the JGB curve outperforms after Tokyo CPI (ex-fresh food) slows to 1.6% y/y in January (P: 2.1%) as optimism for sharp BoJ normalization eases.• CLP (-1.4%) displays substantially weakness after the FinMin pauses their dollar sales.Please refer to our recent publications and collaborations (BoE Preview: Higher For...How Much Longer?; Government Bond Auction Pipeline: The Month Ahead; EM Fixed Income Flows Update: Where Supply Meets Demand; Podcast | Thoughts on the Market: Will the U.S. Presidential Election Change Fed Policy?; Podcast: The Global Macro Guide: January 26). The main G10 central bank events in the week ahead are Monetary Policy Meetings for the FOMC (Jan 31), Riksbank (Feb 1), and BoE (Feb 1). In addition, the Summary of Opinions from the January BoJ (Jan 30) meeting, Riksbank (Feb 2) FX Sales, and SNB 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...
