M Update Global Macro Commentary | Global February 8Morgan 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 BoJ's Uchida says hard to imagine rapid hikes, USD/JPY returns above 149; 30y UST auction comes 2.0bp through; MXN weakens after Banxico opens door to cuts; Further China deflation weighs on Antipodeans; European rates show mild losses; DXY at 104.17 (+0.1%); US 10y at 4.154% (+3.3bp).• BoJ Deputy Governor Uchida says it is hard to imagine a path in which the bank would keep raising interest rates rapidly, given their economic outlook.• US Treasuries grind cheaper through a smaller-than-expected rise in initial jobless claims. Long-end underperformance ceases when the $25bn 30y auction comes 2.0bp through. • Broad JPY weakness coupled with mild USD strength, alongside a modest sell-off in US rates, push USD/JPY (+0.8%) back above the 149.00 level.• MXN (-0.6%) finishes near session lows after Banxico keeps rates on hold at 11.25% (C: 11.25%) but opens the door to rate cuts in its forward guidance.• Data which indicate further CPI and PPI deflation in China weighs on AUD (-0.4%) and NZD (-0.3%).• Amid limited catalysts, European duration displays mild losses led by the belly.Please refer to our recent publications and collaborations (UK Fiscal Policy: Delaying the Inevitable; LatAm Macro Strategy: Can CLP's Structural Underperformance Be Stopped?).Developed MarketsUnited States: Sparse catalysts defined the Thursday session for macro markets, in which the S&P 500 (+0.06%) waited until just before the cash equity close to tick above 5,000 for the first time. It was not overly optimistic risk appetite that weighed on JPY (-0.8%), but remarks from a widely anticipated speech by BoJ Deputy Governor Uchida. Uchida said it is hard to imagine a path in which the bank would keep raising interest rates rapidly, given their economic outlook. He also said the bank does not project inflation will significantly exceed 2%, even if the policy path materializes.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 ma...
