M Update Global Macro Commentary | Global February 6Morgan 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+Gek Teng KhooStrategist Gek.Teng.Khoo@morganstanley.com +852 3963-0303 Tsy Secretary Yellen expresses "concern" about CRE; Front-end UST gains extend on strong 3y auction; USD reverses weaker, risk-sensitive currencies gain; RBA retains tightening bias, AUD climbs; China risk assets surge; EGBs climb into London close; DXY at 104.17 (-0.3%); US 10y at 4.100% (-5.8bp).• US Treasury Secretary Yellen expresses "concern" about commercial real estate and says it requires "careful supervisory attention" as it could create financial stability risks or banking system losses. • US Treasuries richen across the curve after CRE risks return to the forefront, front-end gains later extend after the $54bn 3y auction comes 0.8bp through.• Risk-sensitive currencies find comfort in the US dollar's weakness intraday, as the spillover from steep regional bank losses are limited; SEK and NOK are among the G10 outperformers.• AUD (+0.6%) also strengthens after the RBA keeps the cash rate target at 4.25% (C: 4.25%) but cautions "further increase in interest rates cannot be ruled out."• China risk asset resurgence is led by A-share small caps (CSI 1000: +7.0%) amid media reports the CSRC plans to update top leadership on market conditions. • Renewed deterioration in risk sentiment supports European duration into the London close.Please refer to our latest Global EM Strategist (No Sliding Out of DMs) as well as our recent publications and collaborations (EM Strategy: Does China Have CNY 2 Trillion Offshore to Buy Onshore Stocks).Developed MarketsUnited States: A renewed sharp move lower in a regional bank stock once again spilled over into broader macro markets. As the descent in share price deepened, it helped stem the recent upward momentum of higher Treasury yields and alleviated risk-sensitive currencies from a strengthening US dollar. Broader equities traded more resiliently, as the nature of the acute declines were oriented around exposure to commercial real estate. Coincidentally, remarks by US Treasury Secretary Yellen in testimony to the US 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 ...
