M Update Global Macro Commentary | Global February 22Morgan 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+Min DaiStrategist Min.Dai@morganstanley.com +852 2239-7983 AI optimism lifts SPX to record high; USTs twist flatten, curves end at session lows; Fed's Jefferson cautions on consumer spending; European rates twist flatten, ECB Accounts show cuts still "premature"; KRW gains, BoK on hold; MXN weakens post-CPI; DXY at 103.94 (-0.1%); US 10y at 4.321% (+0.2bp).• Optimism around artificial intelligence emanates in a surge in global equities; the S&P 500 (+2.15%) vaults to a new record high and posts its largest single-session gain since January 2023.• US Treasuries twist flatten as initial jobless claims hover just above post-pandemic lows; the 5s30s (12.7bp) curve ends at session, as well as year-to-date lows.• Fed Vice Chair Jefferson expects slower growth in spending and output in 2024 but cautions continued strength in spending is an "important upside risk" to his forecast.• European rates twist flatten, Accounts from the January ECB meeting show a broad consensus said it was "premature" to discuss rate cuts, members still believe the disinflationary process is "fragile."• KRW gains 0.5% against USD, after the BoK maintains its benchmark rate at 3.50% (C: 3.50%) for the thirteenth consecutive month.• MXN (-0.4%) weakens against USD, after Mexico Headline CPI comes in at -0.10% for 1H February/2H January (C: 0.13%) as the start of the Banxico cutting cycle comes into view.Please refer to our latest Insight (Finding the Flow) as well as our recent publications and collaborations (BoK Review: On the Way to a Dovish Move; Israel Economics and Sovereign Credit Strategy: BOI Preview; EM Credit Brief: Panama's New Three-Tranche Issuance Thoughts).Developed MarketsUnited States: Risk assets traded with a decisively positive tone after key earnings related to the artificial intelligence ecosystem, as micro now dictated macro moves.Broad gains in European and Asia equities were outpaced by the relentless rally in US equities. The S&P 500 (+2.15%) vaulted to a new record high and posted its largest single-session gain since January 2023. The prevailing theme across G4 rates was a pronounced twist flattening of yield curves. Overall solid global preliminary M...
