M Update Global Macro Commentary | Global January 24Morgan 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 JGB sell-off deepens, focus on BoJ normalization; Strong US PMIs start UST sell-off; Solid UK PMIs lower implied BoE cuts; USD/CNH ends little changed, despite PBoC RRR cut; BoC's Macklem says cuts are premature; CLP gains amid FinMin sales; DXY at 103.25 (-0.4%); US 10y at 4.176% (+4.8bp).• JGB sell-off deepens as market participants continue to position for a sharper BoJ normalization cycle, while focus in the long-end turns to the looming 40y JGB auction.• Surprisingly-strong preliminary January S&P Global US PMIs pushes US Treasuries into the red until a large (2.0bp) tail in the $61bn 5y UST auction catalyzes a renewed sell-off in US duration.• Solid preliminary January S&P Global UK PMIs bear-flattens the gilt curve as the market-implied BoE Bank Rate path inches higher; our economists no longer forecast a 1Q24 UK growth contraction.• USD/CNH (-0.1%) struggles to sustain an initial move lower after the PBoC announces a surprise 50bp RRR cut, while local equities (Hang Seng: +3.56%) rally markedly.• BoC Governor Macklem says the Bank needs “to give these higher rates time to do their work,” and reiterated it is “premature” to discuss rate cuts.• CLP (+0.4%) advances as the Chilean FinMin sells another USD 150mn (USD 1.05bn since Thursday).Please refer to our recent publications and collaborations (Global Macro Data: US Liquid Rates Tracker; Global Macro Data: Japan Macro Data Tracker - 2024/01/24; Global Macro Data: UK Rates Monitor - January 23, 2024).Developed MarketsUnited States: Robust corporate earnings in the US streaming space after hours on Tuesday, followed by announced policy easing from China in the overnight session on Wednesday kept risk appetite supported in spite of the surge in JGB yields.The follow-through after the January BoJ meeting was on clear display during the Tokyo session as market participants positioned for a sharper BoJ normalization cycle. JGBs staged a steep sell-off, with 10y JGBs yields higher by 10bp at one point in the session before a close at 0.70%. This sharp repricing in JGBs translated to an Morgan Stanley does and seeks ...
