M Update Global Macro Commentary | Global February 20Morgan 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 Canadian rates outperform after inflation slows sharply; USTs twist-steepen; SEK leads G10 gains against USD; Riksbank's Breman backs patient policy approach; CLP rally continues, after FinMin USD sales; PBoC delivers largest 5y LPR cut on record; DXY at 104.05 (-0.2%); US 10y at 4.275% (-0.4bp).• Canadian rates bull-steepen, outperform on a cross-market basis after January inflation data is well below consensus expectations and pushes trend inflation meaningfully in the right direction.• USTs track Bunds richer during London hours but gains retrace into the NY close. The long-end underperforms throughout the session as the curve twist-steepens, with focus on corporate supply.• SEK (+0.4%) diverges from its usual relationship with risk assets and gains against the US dollar amid remarks from Riksbank policymakers, which tilt hawkishly.• Riksbank Deputy Governor Breman says the central bank needs to be prepared for possible setbacks which could cause inflation to rise again and support a patient stance of monetary policy.• CLP (+0.4%) continues its rally from Monday, when the Finance Ministry sold USD100mn.• China bond yields fall after the PBoC cuts the 5y Loan Prime Rate by 25bp, to 3.95%, the largest reduction on record, as part of the stock market and housing stabilization efforts.Please refer to our latest Global Macro Strategist (Stop! In the Name of Dove), Global EM Strategist (Kenya Leads the Way), as well as our recent publications and collaborations (LatAm Macro Strategy: Three Reasons to Be Long BRL; Ecuador Sovereign Credit Strategy: Better but Still Difficult; EM Strategy: Can Asia Generate Alpha for GBI-EM Investors?; CEEMEA Sovereign Credit Strategy: Lightening Up on Risk; Global Macro Strategy: Global FX Positioning; Global Macro Data: Market Outstanding JGBs - 2024 January-end; Podcast: The Global Macro Guide | Ep. 62).Developed MarketsUnited States: Front-end outperformance was a common theme across DM sovereign bond curves. Canadian rates outperformed on a cross-market basis as front-end yields fell as much as 12bp after January inflation data was well below consensus expectation...
