Podcasts about Fixed income

Our analysts Michael Zezas and Ariana Salvatore discuss the upcoming expiration of reciprocal tariffs and the potential impacts for U.S. trade.Read more insights from Morgan Stanley.----- Transcript -----Michael Zezas: Welcome to Thoughts on the Market. I'm Michael Zezas, global Head of Fixed Income Research and Public Policy Strategy.Ariana Salvatore: And I'm Ariana Salvatore, US Public Policy Strategist.Michael Zezas: Today we're talking about the outlook for US trade policy. It's Wednesday, July 2nd at 10:00 AM in New York.We have a big week ahead as next Wednesday marks the expiration of the 90 day pause on reciprocal tariffs. Ariana, what's the setup?Ariana Salvatore: So this is a really key inflection point. That pause that you mentioned was initiated back on April 9th, and unless it's extended, we could see a reposition of tariffs on several of our major trading partners. Our base case is that the administration, broadly speaking, tries to kick the can down the road, meaning that it extends the pause for most countries, though the reality might be closer to a few countries seeing their rates go up while others announce bilateral framework deals between now and next week.But before we get into the key assumptions underlying our base case. Let's talk about the bigger picture. Michael, what do we think the administration is actually trying to accomplish here?Michael Zezas: So when it comes to defining their objectives, we think multiple things can be true at the same time. So the administration's talked about the virtue of tariffs as a negotiating tactic. They've also floated the idea of a tiered framework for global trading partners. Think of it as a ranking system based on trade deficits, non tariff barriers, VAT levels, and any other characteristics that they think are important for the bilateral trade relationship. A lot of this is similar to the rhetoric we saw ahead of the April 2nd "Liberation Day" tariffs.Ariana Salvatore: Right, and around that time we started hearing about the potential, at least for bilateral trade deals, but have we seen any real progress in that area?Michael Zezas: Not much, at least not publicly, aside from the UK framework agreement. And here's an important detail, three of our four largest trading partners aren't even scoped for higher rates next week. Mexico and Canada were never subject to the reciprocal tariffs. And China's on a separate track with this Geneva framework that doesn't expire until August 12th. So we're not expecting a sweeping overhaul by Wednesday.Ariana Salvatore: Got it. So what are the scenarios that we're watching?Michael Zezas: So there's roughly three that we're looking at and let me break them down here.So our base case is that the administration extends the current pause, citing progress in bilateral talks, and maybe there's a few exceptions along the way in either direction, some higher and some lower. This broadly resets the countdown clock, but keeps the current tariff structure intact: 10% baseline for most trading partners, though some potentially higher if negotiations don't progress in the next week. That outcome would be most in line, we think, with the current messaging coming out of the administration.There's also a more aggressive path if there's no visible progress. For example, the administration could reimpose tariffs with staggered implementation dates. The EU might face a tougher stance due to the complexity of that relationship and Vietnam could see delayed threats as a negotiating tactic. A strong macro backdrop, resilient data for markets that could all give the administration cover to go this route.But there's also a more constructive outcome. The administration can announce regional or bilateral frameworks, not necessarily full trade deals, but enough to remove the near term threat of higher tariffs, reducing uncertainty, though maybe not to pre-2024 levels.Ariana Salvatore: So wide bands of uncertainty, and it sounds like the more constructive outcome is quite similar to our base case, which is what we have in place right now. But translating that more aggressive path into what that means for the economy, we think it would reinforce our house view that the risks here are skewed to the downside.Our economists estimate that tariffs begin to impact inflation about four months after implementation with the growth effects lagging by about eight months. That sets us up for weak but not quite recessionary growth. We're talking 1% GDP on an annual basis in 2025 and 2026, and the tariff passed through to prices and inflation data probably starting in August.Michael Zezas: So bottom line, watch carefully on Wednesday and be vigilant for changes to the status quo on tariff levels. There's a lot of optionality in how this plays out, as trade policy uncertainty in the aggregate is still high. Ariana, thanks for taking the time to talk.Ariana Salvatore: Great speaking with you, Michael.Michael Zezas: And if you enjoy Thoughts on the Market, please leave us a review wherever you listen and share the podcast with a friend or colleague today.

Investors await jobs growth and layoff data along with tomorrow's key nonfarm payrolls report. The House takes up the budget after Senate passage, while the tariff deadline nears.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see ​schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.(0131-0725)

European bourses in the green, shrugging off a mixed APAC lead. US futures post modest gains, RTY outperformsUSD attempts to atone for recent pressure. DXY eyes 97.00 to the upside, JPY lags, EUR and GBP both hitFixed in the red, Gilts lag after the UK Welfare Reform u-turn. USTs await data and fiscal updatesUS House set to convene at 09:00ET, Punchbowl reports several sources expressing alarm at the number of no's from lawmakersCrude in the green and despite light newsflow continue to climb, metals mixedLooking ahead, highlights include US Challenger Layoffs, ADP National Employment, Canadian Manufacturing PMI, NBP Policy Announcement, ECBʼs Lane & Lagarde.Click for the Newsquawk Week Ahead.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

APAC stocks were mixed following a similar handover from the US where participants digested data, trade commentary and a slew of central bank rhetoric.US President Trump said he doubts the US will have a deal with Japan but will possibly have an agreement with India.US Senate narrowly passed President Trump's sweeping tax and spending bill; House to vote by Thursday "at the latest".European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 0.6% after the cash market closed with losses of 0.4% on Tuesday.DXY is modestly firmer, JPY narrowly lags on negative trade headlines, EUR/USD is lingering just below the 1.18 mark.Looking ahead, highlights include EU & Italian Unemployment Rate, US Challenger Layoffs, ADP National Employment, Canadian Manufacturing PMI, NBP Policy Announcement, ECB's de Guindos, Cipollone, Lane, Lagarde & BoE's Taylor, Supply from UK & Germany.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

Ron Kamdem, our U.S. Real Estate Investment Trusts & Commercial Real Estate Analyst, discusses how GenAI could save the real estate industry $34 billion and where the savings are most likely to be found.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I'm Ron Kamdem, Head of Morgan Stanley's U.S. Real Estate Investment Trusts and Commercial Real Estate research. Today I'll talk about the ways GenAI is disrupting the real estate industry.It's Tuesday, July 1st, at 10am in New York.What if the future of real estate isn't about location, location, location – but automation, automation, automation?While it may be too soon to say exactly how AI will affect demand for real estate, what we can say is that it is transforming the business of real estate, namely by making operations more efficient. If you're a customer dealing with a real estate company, you can now expect to interact with virtual leasing assistants. And when it comes to drafting your lease documents, AI can help you do this in minutes rather than hours – or even days.In fact, our recent work suggests that GenAI could automate nearly 40 percent of tasks across half a million occupations in the real estate investment trusts industry – or REITs. Indeed, across 162 public REITs and commercial real estate services companies or CRE with $92 billion of total labor costs, the financial impact may be $34 billion, or over 15 percent of operating cash flow. Our proprietary job posting database suggests the top four occupations with automation potential are management – so think about middle management – sales, office and administrative support, and installation maintenance and repairs.Certain sub-sectors within REITs and CRE services stand to gain more than others. For instance, lodging and resorts, along with brokers and services, and healthcare REITs could see more than 15 percent improvement in operating cash flow due to labor automation. On the other hand, sectors like gaming, triple net, self-storage, malls, even shopping centers might see less than a 5 percent benefit, which suggests a varied impact across the industry.Brokers and services, in particular, show the highest potential for automation gains, with nearly 34 percent increase in operating cash flow. These companies may be the furthest along in adopting GenAI tools at scale. In our view, they should benefit not only from the labor cost savings but also from enhanced revenue opportunities through productivity improvement and data center transactions facilitated by GenAI tools.Lodging and resorts have the second highest potential upside from automating occupations, with an estimated 23 percent boost in operating cash flow. The integration of AI in these businesses not only streamline operations but also opens new avenues for return on investments, and mergers and acquisitions.Some companies are already using AI in their operations. For example, some self-storage companies have integrated AI into their digital platforms, where 85 percent of customer interactions now occur through self-selected digital options. As a result, they have reduced on-property labor hours by about 30 percent through AI-powered staffing optimization. Similarly, some apartment companies have reduced their full-time staff by about 15 percent since 2021 through AI-driven customer interactions and operational efficiencies.Meanwhile, this increased application of AI is driving new revenue to AI-enablers. Businesses like data centers, specialty, CRE services could see significant upside from the infrastructure buildout from GenAI. Advanced revenue management systems, customer acquisition tools, predictive analytics are just a few areas where GenAI can add value, potentially enhancing the $290 billion of revenue stream in the REIT and CRE services space.However, the broader economic impact of GenAI on labor markets remains hotly debated. Job growth is the key driver of real estate demand and the impact of AI on the 164 million jobs in the U.S. economy remains to be determined. If significant job losses materialize and the labor force shrinks, then the real estate industry may face top-line pressure with potentially disproportionate impact on office and lodging. While AI-related job losses are legitimate concerns, our economists argue that the productivity effects of GenAI could ultimately lead to net positive job growth, albeit with a significant need for re-skilling.Thanks for listening. If you enjoy the show, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.

Job openings kick off a host of labor-related data, and Powell speaks on a panel this morning. Budget and trade chatter are also top of mind as markets keep setting highs.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see ​schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.(0131-0725)

APAC stocks began the new quarter mostly higher, albeit with gains tentative; Wall Street closed higher.The Senate vote-a-rama process is ongoing before a final version is sent back to the House to approve the bill, before then sending it to Trump's desk.EU is to accept Trump's universal tariff but seeks key exemptions and wants the US to commit to lower rates on key sectors, according to Bloomberg.European equity futures indicate an uneventful cash market open with Euro Stoxx 50 future +0.1% after the cash market closed with losses of 0.4% on Monday.DXY is steady, EUR/USD briefly ventured onto a 1.18 handle, USD/JPY marginally extended on its downside.Looking ahead, highlights include EZ, UK & US Manufacturing PMIs, German Unemployment Rate, EZ HICP, US ISM Manufacturing, JOLTS Job Openings, ECB SCE & Central Banking Forum, Speakers include ECB's de Guindos, Elderson, Schnabel & Lagarde, Fed's Powell, BoJ's Ueda, BoE's Bailey & BoK's Rhee.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

US Senate vote-a-rama is still ongoing, Thune suggests we are "getting to the end", unclear if he has enough votesEU reportedly wants immediate relief in any US deal, said to be accepting universal tariffs but is seeking key exemptionsRisk tone began firmer after strong Chinese data; thereafter, deteriorated into and through the European morningUS futures in the red, ES -0.2%, awaiting updates on the Reconciliation Bill, Chair Powell and a packed data docketUSD continues to fall. JPY and CHF lead, fixed bid, XAU higher.EUR and EGBs unreactive to as-expected flash HICP and numerous ECB speakers who have focused on EUR strengthLooking ahead, highlights include US Manufacturing PMIs, ISM Manufacturing, JOLTS Job Openings, ECB Central Banking Forum, Speakers including ECB's Schnabel & Lagarde, Fed's Powell, BoJ's Ueda, BoE's Bailey & BoK's Rhee. Earnings from Constellation Brands. Holiday closures in Hong Kong & Canada.Click for the Newsquawk Week Ahead.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

The U.S. housing market appears to be stuck. Our co-heads of Securitized Product research, Jay Bacow and James Egan, explain how supply and demand, as well as mortgage rates, play a role in the cooling market.Read more insights from Morgan Stanley.----- Transcript -----James Egan: Welcome to Thoughts on the Market. I'm Jim Egan, co-head of Securitized Products Research at Morgan Stanley.Jay Bacow: And I'm Jay Bacow, the other co-head of Securitized Products Research at Morgan Stanley. And after getting through last week's blistering hot temperatures, today we're going to talk about what may be a cooling housing market. It's Monday, June 30th at 2:30pm in New York. Now, Jim, home prices. We just got another index. They set another record high, but the pace of growth – the acceleration as a physicist in me wants to say – appears to be slowing. What's going on here?James Egan: The pace of home price growth reported this month was 2.7 percent. That is the lowest that it's been since August of 2023. And in our view, the reason's pretty simple. Supply is increasing, while demand has stalled.Jay Bacow: But Jim, this was a report for the spring selling season. I know we got it in June, but this is supposed to be the busiest time of the year. People are happy to go around. They're looking at moving over the summer when the kids aren't in school. We should be expecting the supply to increase. Are you saying that it's happening more than it's anticipated?James Egan: That is what we're saying. Now, we should be expecting inventories today to be higher than they were in, call it January or February. That's exactly the seasonality that you're referring to. But it's the year-over-year growth we're paying attention to here. Homes listed for sale are up year-over-year, 18 months in a row. And that pace, it's been accelerating. Over the past 40 years, the pace of growth from this past month was only eclipsed one time, the Great Financial Crisis.Jay Bacow: [sighs] I always get a little worried when the housing analyst brings up the Great Financial Crisis. Are you saying that this time the demand isn't responding?James Egan: That is what we're saying. So, through the first five months of this year, existing home sales are only down about 2 percent versus the first five months of 2024. So they've basically kind of plateaued at these levels. But that also means that we're seeing the fewest number of transactions through May in a calendar year since 2009. And that combination of easing inventory and lackluster demand, it's pushed months of supply back to levels that we haven't seen since the beginning of this pandemic. Call it the fourth quarter of 2019, first quarter of 2020, right before inventory has really plummeted to historic lows.Jay Bacow: All right, so 2009, another financial crisis reference. But you're also – you're speaking around a national level, and as a housing analyst, I feel like you haven't really spoken about the three most important factors when we think about things which are: Location. Location. And location.James Egan: Absolutely. And the deceleration that we're seeing in home price growth – and I would point out it is still growth – has been pervasive across the country. Year-over-year, HPA is now decelerating in 100 percent of the top 100 MSAs, for which we have data. In fact, a full quarter of them, 25 percent of these cities are now actually seeing prices decline on a year-over-year basis. And that's up from just 5 percent with declining home prices one year ago.Jay Bacow: As a homeowner, I do like the home price growth. And is it the same story when you look more narrowly around supply and demand?James Egan: So, there might be some geographical nuances, but we do think that it largely boils down to that. Local inventory growth has been a very good indicator of weaker home price performance, particularly the level of for-sale inventory today versus that fourth quarter of 2019. If we look at it on a geographic basis, of 14 MSAs that have the highest level of inventory today compared to 2019, 11 of them are in either Florida or Texas. On the other end of the spectrum, the cities where inventory remains furthest away from where it was four and a half years ago, they're in the Northeast, they're in the Midwest.Jay Bacow: As somebody who lives in the Northeast, I'd like to hear that again. But you're also; you're quoting existing prices, which that's been the outperformer in the housing market. Right?James Egan: Exactly. New home prices have actually been decreasing year-over-year for the past year and a half at this point. It's actually brought the basis between new home prices, which tend to trade at a little bit of a premium to existing sales; it's brought that basis to its tightest level that we've seen in at least 30 years. And that's before we take into account the fact that home builders have been buying down some of these mortgage rates. But Jay, you've recently done some work trying to size this.Jay Bacow: Yeah. First it might help to explain what a buydown is.A home builder might have a new home listed at say, $450,000. And with mortgage rates in the context of about 6.5 percent right now, the home buyer might not be able to afford that, so they offer to pay less. The home builder – often many of them also have an origination arm as well. They'll say, you know what? We'll sell it to you at that $450,000, but we'll give you a lower mortgage rate; instead of 6.5 percent, we'll sell it to you for $450,000 with a 5 percent mortgage rate. Then maybe the home buyer can afford that.James Egan: And so, new home prices are actually coming down. And by that we're specifically referring to the median price of new home transactions. They're falling despite the fact that these buy downs might be influencing prices a little bit higher.Jay Bacow: Right. And when we look at how often this is happening, it's a little actually hard to get it from the data because they don't have to report it. But when we look at the distribution of mortgage rates in a given month – prior to 2022, there were effectively no purchase loans that were originated less than one point below the prevailing mortgage rate for a given month.However, more recently we're up to about 12 percent of Ginnie Mae purchases, and those are the more credit constrained borrowers that might have a harder time buying a home. And about 5 percent of conventional purchase loans are getting originated with a rate 1 percent below the outstanding marketJames Egan: And so, this might be another sign that we're seeing a little bit of softening in home prices. But what are the implications on the agency mortgage side?Jay Bacow: I would say there's probably two things that we're keeping an eye out on. Because these are homeowners that are getting below market rate, the investors are getting a below market coupon. And because they're getting sold at a discount, they don't want that, but they're going to stay around for a while. So, investors are getting these rates that they don't want for longer.And then the other thing you think about from the home buyer perspective is, you know, maybe they – it's good for them right now. But if they want to sell that home, because they're getting a below market mortgage rate, they bought the home for maybe more than other people would've. So, unless they can sell it with that mortgage attached, which is very difficult to do, they probably have to sell it for a lower price than when they bought it.Now Jim, what does all this mean for home prices going forward?James Egan: Now, when we think about home prices, we're talking about the home price indices, right? And so those are going to be repeat sales. It's going to, by definition, look at existing prices and not necessarily the dynamics we're talking in the new home price market.Jay Bacow: Okay, so all this builder buy down stuff is interesting for what it means for new home prices – but doesn't impact all the HPA indices that you reference.James Egan: Exactly, and at the national level, despite what we've been talking about on this podcast, we do think that home prices remain more supported than what we are seeing locally. Inventory is increasing, but it also remains near historically low levels. Months of supply that I mentioned at the top of this podcast, it's picked up to the highest level it's been since the beginning of this pandemic. We're also talking about four to four and a half months of supply. Anything below six is a tight environment that has been historically associated with home prices continuing to climb.That's why our base case is for positive HPA this year. We're at +2 percent. That's slower than where we are now. We think you're going to continue to see deceleration. And because of what we're seeing from a supply and demand perspective, we are a little bit more skewed to the downside in our bear case. Instead of that +2, we're at -3 percent than we are towards the upside in our bull case. Instead of that plus two, we're at plus 5 percent in the bull case. So slower HPA from here, but still positive.Jay Bacow: Well, Jim, it's always a pleasure talking to you, particularly when you're highlighting that the home price growth is going to be stronger in the place where I own a home.James Egan: Pleasure talking to you too, Jay. And to all of you listening, thank you for listening to another episode of Thoughts on the Market. Please leave a review or a like wherever you get this podcast and share Thoughts on the Market with a friend or colleague today.Jay Bacow: Go smash that subscribe button.

Jobs data dominate a holiday-shortened week, highlighted by Thursday's June payrolls. Stocks hit new record highs Friday despite trade tension with Canada. Powell talks tomorrow.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see ​schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.(0130-0625)

APAC stocks began the week mostly in the green following last Friday's record highs on Wall St; participants digested a slew of data including mixed Chinese PMIs.US and Canada agreed to resume negotiations with a view towards reaching a deal by July 21st after Canada rescinded the Digital Services Tax.The Senate is set to vote on Trump's sweeping tax cut and spending bill on Monday following a 51-49 vote to open the debate on the bill.European equity futures indicate a positive open with Euro Stoxx 50 future up 0.3% after the cash market closed with gains of 1.6% on Friday.DXY has kicked the week off on the backfoot but holding above Friday's low, JPY outperforms, EUR/USD sits on a 1.17 handle.Looking ahead, highlights include UK GDP (Q1 final), German Import Prices, Retail Sales & CPI, Italian CPI, US Chicago PMI, ECB's de Guindos & Lagarde, Fed's Bostic & Goolsbee.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

A firmer start to the week Stateside, ES +0.4%, as markets focus on the progress of Trump's Bill; however, Europe is more contained, Stoxx 600 +0.1%, as the reciprocal deadline nears.US Senate voted to begin debating the Reconciliation Bill; vote-a-rama not expected to start until 09:00ET today, as such the House will not vote until Wednesday at the earliest, via Fox's Pergram.DXY has kicked off week-, month-, quarter- & H1-end on a mildly negative footing, though the magnitude of this has dissipated across the morning. EUR contained, JPY outperforms, GBP softer.Fixed benchmarks were contained overnight before EGBs picked up on numerous German data points.Crude benchmarks are in the red but only modestly so, updates continue on the geopolitical front, with Trump saying he is not offering Iran anything.Looking ahead, highlights include US Chicago PMI, Speakers including ECB's de Guindos & Lagarde, Fed's Bostic & Goolsbee.Click for the Newsquawk Week Ahead.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

Got started with Japan executing a serial killer, and China cracking down on popular gay erotic fiction authors. Plus big SCOTUS rulings, Iran admits nuke program damaged, Congo cease-fire, Germany tries to rebuild military, and a Hong Kong guy on shitter for two hours turns up at hospital with a 13-centimeter rectal prolapse. Music: DJ Shadow/"Fixed Income"

Stock tickers may not immediately price in uncertainty during times of geopolitical volatility. Our Head of Corporate Credit Research Andrew Sheets suggests a different indicator to watch.Read more insights from Morgan Stanley.----- Transcript -----Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley.Today I'm going to talk about how we're trying to simplify the complicated questions of recent geopolitical events.It's Friday, June 27th at 2pm in London.Recent U.S. airstrikes against Iran and the ongoing conflict between Iran and Israel have dominated the headlines. The situation is complicated, uncertain, and ever changing. From the time that this episode is recorded to when you listen to it, conditions may very well have changed again.Geopolitical events such as this one often have a serious human, social and financial cost, but they do not consistently have an impact on markets. As analysis by my colleague, Michael Wilson and his team have shown, over a number of key geopolitical events over the last 30 years, the impact on the S&P 500 has often been either fleeting or somewhat non-existent. Other factors, in short, dominate markets.So how to deal with this conundrum? How to take current events seriously while respecting that historical precedent that they often can have more limited market impact? How to make a forecast when quite simply few investors feel like they have an edge in predicting where these events will go next?In our view, the best way to simplify the market's response is to watch oil prices. Oil remains an important input to the world economy, where changes in price are felt quickly by businesses and consumers.So when we look back at past geopolitical events that did move markets in a more sustained way, a large increase in oil prices often meaning a rise of more than 75 percent year-over-year was often part of the story. Such a rise in such an important economic input in such a short period of time increases the risk of recession; something that credit markets and many other markets need to care about. So how can we apply this today?Well, for all the seriousness and severity of the current conflict, oil prices are actually down about 20 percent relative to a year ago. This simply puts current conditions in a very different category than those other periods be they the 1970s or more recently, Russia's invasion of Ukraine that represented genuine oil price shocks. Why is oil down? Well, as my colleague Martin Rats referred to on an earlier episode of this program, oil markets do have very healthy levels of supply, which is helping to cushion these shocks.With oil prices actually lower than a year ago, we think the credit will focus on other things. To the positive, we see an alignment of a few short-term positive factors, specifically a pretty good balance of supply and demand in the credit market, low realized volatility, and a historically good window in the very near term for performance. Indeed, over the last 15 years, July has represented the best month of the year for returns in both investment grade and high yield credit in both the U.S. and in Europe.And what could disrupt this? Well, a significant spike in oil prices could be one culprit, but we think a more likely catalyst is a shift of those favorable conditions, which could happen from August and beyond. From here, Morgan Stanley economists' forecasts see a worsening mix of growth in inflation in the U.S., while seasonal return patterns to flip from good to bad.In the meantime, however, we will keep watching oil.Thank you as always for your time. If you find Thoughts the Market useful, let us know by leaving a review wherever you listen, and also tell a friend or colleague about us today.

Hear from members of the UBS Chief Investment Office fixed income team as they provide a performance and positioning update across fixed income sub-sectors. Featured are Leslie Falconio, Head of Taxable Fixed Income Strategy Americas, Sudip Mukherjee, Senior Municipal Strategist Americas, along with Senior Fixed Income Strategists' Barry McAlinden and Frank Sileo, from the UBS Chief Investment Office.

Investors brace for May PCE prices, Fed stress test results on big banks, and final June consumer sentiment. Nike shares are under a microscope after earnings.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see ​schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.(0130-0625)

US President Trump said he just signed a deal with China on Wednesday; it was later clarified that the US and China have agreed to an additional understanding to implement the Geneva agreement.US Commerce Secretary Lutnick stated that several deals will be announced in the coming week, with the Europe deal expected at the end.Iranian Foreign Minister Araqchi said Tehran is assessing whether diplomacy with the US is in its interest, adding that there is currently no understanding for renewed talks with the US.APAC stocks traded mostly firmer for a bulk of the session following gains on Wall Street, before waning off best levels to trade mixed.European equity futures are indicative of a firmer open - catching up to some of the late Wall Street gains - with the Euro Stoxx 50 future +0.5% after cash closed -0.2% on Thursday.Looking ahead, highlights include French CPI, Spanish HICP, Retail Sales, EZ Business Climate, Italian Industrial Sales, US PCE, UoM Survey Final, Fed's Williams, Hammack; ECB's Cipollone, and Supply from Italy. Click for the Newsquawk Week Ahead.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

Manpreet discusses with Ray how investors can position themselves to take advantage of potential market volatility as the Trump trade truce expires. They also share their views on the Japanese equities market and conclude with a discussion on oil price and the Canadian dollar amid the risk events in the Middle East.Find out more from our latest Weekly Market View report here.Speakers:Manpreet Gill, CIO of Africa, Middle East & Europe (AME/E) and Head of Fixed Income, Currency and Commodities (FICC) Strategy, Standard Chartered BankRay Heung, Senior Investment Strategist, Standard Chartered Bank

US Commerce Secretary Lutnick stated that several deals will be announced in the coming week, with the Europe deal expected at the end.Punchbowl reports that Republican Senators say voting on the Reconciliation Bill will not begin until Saturday at the absolute earliest.European bourses benefit from a flurry of US-EU trade updates, US futures gain modestly into PCE.DXY extends its losing streak for a fifth session as PCE looms.USTs are under modest pressure with Bunds also hampered following French/Spanish inflation figures.Crude is firmer & XAU slips given the risk tone but base metals fail to benefit.Looking ahead, US PCE, UoM Survey Final, Fed's Williams, Hammack; ECB's Cipollone.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

This week, we discuss new all-time highs from the Nasdaq-100, growth stocks, two semiconductors, and the decoupling of the international equity/crude oil relationship.

Our Global Head of Macro Strategy Matt Hornbach and U.S. Economist Michael Gapen assess the Fed's path forward in light of inflation and a weaker economy, and the likely market outcomes.Read more insights from Morgan Stanley.----- Transcript -----Matt Hornbach: Welcome to Thoughts on the Market. I'm Matthew Hornbach, Global Head of Macro Strategy. Michael Gapen: And I'm Michael Gapen, Morgan Stanley's Chief U.S. Economist. Matt Hornbach: Today we're discussing the outcome of the June Federal Open Market Committee meeting and our expectations for rates, inflation, and the U.S. dollar from here. It's Thursday, June 26th at 10am in New York. Matt Hornbach: Mike, the Federal Reserve decided to hold the federal funds rate steady, remaining within its target range of 4.25 to 4.5 percent. It still anticipates two rate cuts by the end of 2025; but participants adjusted their projections further out suggesting fewer cuts in 2026 and 2027. You, on the other hand, continue to think the Fed will stay on hold for the rest of this year, with a lot of cuts to follow in 2026. What specifically is behind your view, and are there any underappreciated dynamics here? Michael Gapen: So, we've been highlighting three reasons why we think the Fed will cut late but cut more. The first is tariffs introduce differential timing effects on the economy. They tend to push inflation higher in the near term and they weaken consumer spending with a lag. If tariffs act as a tax on consumption, that tax is applied by pushing prices higher – and then only subsequently do consumers spend less because they have less real income to spend. So, we think the Fed will be seeing more inflation first before it sees the weaker labor market later. The second part of our story is immigration. Immigration controls mean it's likely to be much harder to push the unemployment rate higher. That's because when we go from about 3 million immigrants per year down to about 300,000 – that means much lower growth in the labor force. So even if the economy does slow and labor demand moderates, the unemployment rate is likely to remain low. So again, that's similar to the tariff story where the Fed's likely to see more inflation now before it sees a weaker labor market later. And third, we don't really expect a big impulse from fiscal policy. The bill that's passed the house and is sitting in the Senate, we'll see where that ultimately ends up. But the details that we have in hand today about those bills don't lead us to believe that we'll have a big impulse or a big boost to growth from fiscal policy next year. So, in total the Fed will see a lot of inflation in the near term and a weaker economy as we move into 2026. So, the Fed will be waiting to ensure that that inflation impulse is indeed transitory, but a Fed that cuts late will ultimately end up cutting more. So we don't have rate hikes this year, Matt, as you noted. But we do have 175 basis points in rate cuts next year. Matt Hornbach: So, Mike, looking through the transcript of the press conference, the word tariffs was used almost 30 times. What does the Fed's messaging say to you about its expectations around tariffs? Michael Gapen: Yeah, so it does look like in this meeting, participants did take a stand that tariffs were going to be higher, and they likely proceeded under the assumption of about a 14 percent effective tariff rate. So, I think you can see three imprints that tariffs have on their forecast.First, they're saying that inflation moves higher, and in the press conference Powell said explicitly that the Fed thinks inflation will be moving higher over the summer months. And they revised their headline and core PCE forecast higher to about 3 percent and 3.1 percent – significant upward revisions from where they had things earlier in the year in March before tariffs became clear. The second component here is the Fed thinks any inflation story will be transitory. Famous last words, of course. But the Fed forecast that inflation will fall back towards the 2 percent target in 2026 and 2027; so near-term impulse that fades over time. And third, the Fed sees tariffs as slowing economic growth. The Fed revised lower its outlook for growth in real GDP this year. So, in some [way], by incorporating tariffs and putting such a significant imprint on the forecast, the Fed's outlook has actually moved more in the direction of our own forecast. Matt Hornbach: I'd like to stay on the topic of geopolitics. In contrast to the word tariffs, the words Middle East only was mentioned three times during the press conference. With the weekend events there, investor concerns are growing about a spike in oil prices. How do you think the Fed will think about any supply-driven rise in energy, commodity prices here? Michael Gapen: Yeah, I think the Fed will view this as another element that suggests slower growth and stickier inflation. I think it will reinforce the Fed's view of what tariffs and immigration controls do to the outlook. Because historically when we look at shocks to oil prices in the U.S.; if you get about a 10 percent rise in oil prices from here, like another $10 increase in oil prices; history would suggest that will move headline inflation higher because it gets passed directly into retail gasoline prices. So maybe a 30 to 40 basis point increase in a year-on-year rate of inflation. But the evidence also suggests very limited second round effects, and almost no change in core inflation. So, you get a boost to headline inflation, but no persistence elements – very similar to what the Fed thinks tariffs will do. And of course, the higher cost of gasoline will eat into consumer purchasing power. So, on that, I think it's another force that suggests a slower growth, stickier inflation outlook is likely to prevail.Okay Matt, you've had me on the hot seat. Now it's your turn. How do you think about the market pricing of the Fed's policy path from here? It certainly seems to conflict with how I'm thinking about the most likely path. Matt Hornbach: So, when we look at market prices, we have to remember that they are representing an average path across all various paths that different investors might think are more likely than not. So, the market price today, has about 100 basis points of cuts by the end of 2026. That contrasts both with your path in terms of magnitude. You are forecasting 175 basis points of rate cuts; the market is only pricing in 100. But also, the market pricing contrasts with your policy path in that the market does have some rate cuts in the price for this year, whereas your most likely path does not. So that's how I look at the market price. You know, the question then becomes, where does it go to from here? And that's something that we ultimately are incorporating into our forecasts for the level of Treasury yields. Michael Gapen: Right. So, turning to that, so moving a little further out the curve into those longer dated Treasury yields. What do you think about those? Your forecast suggests lower yields over the next year and a half. When do you think that process starts to play out? Matt Hornbach: So, in our projections, we have Treasury yields moving lower, really beginning in the fourth quarter of this year. And that is to align with the timing of when you see the Fed beginning to lower rates, which is in the first quarter of next year. So, market prices tend to get ahead of different policy actions, and we expect that to remain the case this year as well. As we approach the end of the year, we are expecting Treasury yields to begin falling more precipitously than they have over recent months. But what are the risks around that projection? In our view, the risks are that this process starts earlier rather than later. In other words, where we have most conviction in our projections is in the direction of travel for Treasury yields as opposed to the timing of exactly when they begin to fall. So, we are recommending that investors begin gearing up for lower Treasury yields even today. But in our projections, you'll see our numbers really begin to fall in the fourth quarter of the year, such that the 10-year Treasury yield ends this year around 4 percent, and it ends 2026 closer to 3 percent. Michael Gapen: And these days it's really impossible to talk about movements in Treasury yields without thinking about the U.S. dollar. So how are you thinking about the dollar amidst the conflict in the Middle East and your outlook for Treasury yields? Matt Hornbach: So, we are projecting the U.S. dollar will depreciate another 10 percent over the next 12 to 18 months. That's coming on the back of a pretty dramatic decline in the value of the dollar in the first six months of this year, where it also declined by about 10 percent in terms of its value against other currencies. So, we are expecting a continued depreciation, and the conflict in the Middle East and what it may end up doing to the energy complex is a key risk to our view that the dollar will continue to depreciate, if we end up seeing a dramatic rise in crude oil prices. That rise would end up benefiting countries, and the currencies of those countries who are net exporters of oil; and may end up hurting the countries and the currencies of the countries that are net importers of oil. The good news is that the United States doesn't really import a lot of oil these days, but neither is it a large net exporter either.So, the U.S. in some sense turns out to be a bit of a neutral party in this particular issue. But if we see a rise in energy prices that could benefit other currencies more than it benefits the U.S. dollar. And therefore, we could see a temporary reprieve in the dollar's depreciation, which would then push our forecast perhaps a little bit further into the future. So, with that, Mike, thanks for taking the time to talk. Michael Gapen: It's great speaking with you, Matt. Matt Hornbach: And thanks for listening. If you enjoy thoughts on the Market, please leave us a review wherever you listen and share the podcast with a friend or colleague today.

Nike results and jobless claims, along with GDP, are on tap after Micron reported solid earnings late Wednesday. With Middle East fears receding, tariff concerns could return.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see ​schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.(0130-0625)

US President Trump may accelerate the announcement of a successor to Fed Chair Powell, according to WSJ sources.Chinese state planner official said with policy implementation and introduction, "we are confident and capable of minimising the adverse impacts from external shock", according to Reuters.Micron (MU) said there may have been some tariff-related pull-ins by certain customers; customer inventory levels have been healthy overall across end markets.European & US indices trade modestly higher, ES +0.3%; Shell has “no intention” of making an offer for BP.DXY hammered amid reports Trump is to name a Powell successor early; a report which has also weighed on US yields.Crude trims initial gains, metals glean strength from the dovish Fed source report, USD weakness and Chinese commentary.Looking ahead, US Durable Goods, GDP Final (Q1), PCE (Q1), Jobless Claims, National Activity Index, Advance Goods Trade Balance, Wholesale Inventories, Banxico Policy Announcement, ECB's de Guindos, Schnabel, Lagarde; BoE's Bailey; Fed's Daly, Barkin, Hammack, Barr, Kashkari, Supply from the US, Earnings from Walgreens, Nike.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

APAC stocks traded mixed in choppy fashion following a similar session on Wall Street, with overnight newsflow relatively light as Israel and Iran seemingly continued to observe the ceasefire.US President Trump may accelerate the announcement of a successor to Fed Chair Powell, according to WSJ sources.Chinese state planner official said with policy implementation and introduction, "we are confident and capable of minimising the adverse impacts from external shock", according to Reuters.HKMA bought HKD 9.42bln as the Hong Kong dollar hit the weak end of its trading range, marking the first such intervention since 2023 to defend the currency peg.Micron (MU) said there may have been some tariff-related pull-ins by certain customers; customer inventory levels have been healthy overall across end markets.Looking ahead, highlights include German GfK Consumer Sentiment, US Durable Goods, GDP Final (Q1), PCE (Q1), Jobless Claims, National Activity Index, Advance Goods Trade Balance, Wholesale Inventories, Banxico Policy Announcement, ECB's de Guindos, Schnabel, Lagarde; BoE's Bailey, Breeden; Fed's Daly, Barkin, Hammack, Barr, Kashkari, supply from US, Earnings from Walgreens, Nike, H&M.Click for the Newsquawk Week Ahead.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

Our Australia Materials Analyst Rahul Anand discusses why critical minerals may be the Achilles' heel of humanoids as demand significantly outpaces supply amid geopolitical uncertainties.Read more insights from Morgan Stanley.----- Transcript -----Rahul Anand: Welcome to Thoughts on the Market. I'm Rahul Anand, Head of Morgan Stanley's Australia Materials Research team.Today, I'll dig deeper into one of the vital necessities for the development of robotics – critical minerals – and why they're so vital to be front of mind for the Western world today. It's Wednesday, June 25th at 8am in Sydney, Australia. Humanoid robots will soon become an integral part of our daily lives. A few weeks ago, you heard my colleagues Adam Jonas and Sheng Zhong discuss how humanoids are going to transform the economy and markets. Morgan Stanley Research expects this market to reach more than a billion units by 2050 and generate almost [$] 5 trillion in annual revenue. When we think about that market, and we think about what it could do for critical minerals demand, that could skyrocket. And the key areas of critical minerals demand would basically be focused on rare earths, lithium and graphite. Each one of these complex machines is going to require about a kilo of rare earths, 2 kgs of lithium, 6.5 kgs kilos of copper, 1.5 kgs of nickel, 3 kgs of graphite, and about 200 grams of cobalt. Importantly, this market from a cumulative standpoint by the year 2050, could be to the tune of about $800 billion U.S., which is staggering.And beyond that market size of $800 billion U.S., I think it's important to drill a bit deeper – because if we now consider how these markets are dominated currently, comes the China angle. And China currently dominates 88 percent of rare earth supply, 93 percent of graphite supply and 75 percent of refined lithium supply. China recently placed controls on seven heavy rare earths and permanent magnet exports in response to tariff announcements that were made by the U.S., and a comprehensive deal there is still awaited. It's very important that we have to think about diversification today, not just because these critical minerals are so heavily dominated by China. But more importantly, if we think about how the supply chain comes about, it's now taking circa 18 years to get a new mine online, and that's the statistic for the past five years of mines that came online. That number is up nearly 50 percent from last decade, and that's been driven basically by very long approval processes now in the Western world, alongside very long exploration times that are required to get some of these mines up and running. On top of that, when we think about the supply demand balance, by 2040 we're expecting that the NdPr, or the rare earth, market would be in a 26 percent deficit. Lithium could be in a deficit close to 80 percent. So, it's not just about supply security. It's also about how long it will take to bring these mines on. And on top of that, how big the amount of supply that's required is really going to be. I know when you think about 2040, it sounds very long dated, but it's important to understand that we have to act now. And in this humanoid piece of research that we have done as the global materials team, which was led by the Australian materials team, we basically have provided 34 global stocks to play this thematic in the rare earths, lithium and rare earth magnet space. It's also very important to remember and keep front of mind that as part of the London negotiations that happened between U.S. and China, no agreement was reached on critical military use rare earth magnets and exports. Now that's an important point because that's going to play as a key point of leverage in any future trade deal that comes about between the two countries. This remains an evolving situation, and this is something that we are going to continue monitoring and will bring you the latest on as time progresses.Look, thanks for listening. If you enjoy the show, please leave us a review and share thoughts on the market with a friend or colleague today.

Key Takeaways: Debt & Monetary Expansion The global financial system is under pressure from mounting debt levels, prompting governments to expand the money supply to meet their obligations—raising concerns about long-term fiat currency stability. Bitcoin as a Strategic Hedge With its fixed supply and decentralized nature, Bitcoin stands out as a compelling alternative to traditional assets, particularly in an environment of fiat devaluation and inflationary pressures. Emergence of Bitcoin-Backed Securities Financial innovation has led to products such as Bitcoin-backed convertible debt and structured notes, offering investors enhanced yields with a more balanced risk profile. Reimagining Sovereign Debt The concept of Bitcoin-backed government bonds introduces a transformative approach to public finance, potentially offering a more sustainable and market-aligned funding strategy for nations. Institutional Embrace & Market Shift Financial markets are rapidly adapting, with hedge funds, asset managers, and institutional investors increasingly allocating capital to Bitcoin-linked instruments, signaling a broader shift in portfolio construction. Chapters: Timestamp Summary 0:00 Wall Street's Solution to Global Debt and Bondholder Concerns 5:02 Bitcoin as a Hedge Against Global Money Printing 9:18 Bitcoin-Backed Securities and Innovative Financial Strategies 18:14 US Government Bonds Backed by Bitcoin as a Future Strategy 24:42 Evolving Finance: Opportunities and Risks in Investment Strategies   Powered by Stone Hill Wealth Management   Social Media Handles    Follow Phillip Washington, Jr. on Instagram (@askphillip)   Subscribe to Wealth Building Made Simple newsletter https://www.wealthbuildingmadesimple.us/   Ready to turn your investing dreams into reality? Our "Wealth Building Made Simple" premium newsletter is your secret weapon. We break down investing in a way that's easy to understand, even if you're just starting out. Learn the tricks the wealthy use, discover exciting opportunities, and start building the future YOU want. Sign up now, and let's make those dreams happen!   WBMS Premium Subscription   Phillip Washington, Jr. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

Fed's Powell speaks to a Senate committee after helping key Tuesday's rally by signalling flexibility on rates. Micron reports later, and the Middle East remains a focus point.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.(0130-0625)

APAC stocks traded stronger following the firm lead from Wall Street, with gains capped as traders were cautious amid the fragility of the Israel-Iran ceasefire.Geopolitical newsflow was relatively light in APAC hours, with no hostile incidents seen between Israel and Iran; “There have been no [US] sanctions lifted on Iran,” said Fox Business' Lawrence, in reference to President Trump's post suggesting China could continue to buy oil from Iran.Fed Chair Powell said they would expect to see meaningful inflation effects from tariffs in June, July, and August. He added that if those effects failed to materialise, it could lead to an earlier rate cut.BoJ board member Tamura said that if upward price risks heightened, the BoJ could face a situation where it would need to raise rates decisively, even if uncertainty remained high, adding that he does not see 0.5% as a barrier for BoJ rate hikes.Fox's Gasparino posted that Team Trump said it was close to announcing a handful of trade deals. The major ones the White House claimed progress on involved Japan, South Korea, and Vietnam.Looking ahead, highlights include US Building Permits, CNB Policy Announcement; NATO Summit, Fed SLR meeting, BoE's Lombardelli, Pill, Greene; Fed's Powell; US President Trump, Supply from Italy, UK, US, and Earnings from General Mills, Paychex, Micron, Babcock.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

Fox's Gasparino posted that Team Trump said it was close to announcing a handful of trade deals. The major ones the White House claimed progress on involved Japan, South Korea, and Vietnam.European bourses are mixed in quiet newsflow whilst US futures hold around the unchanged mark.USD looks to claw back recent losses. EUR/USD pulls back from multi-year high.USTs await Powell part 2 and details from the NATO summit; Bunds are pressured and currently towards session lows.Crude bid but still at the trough of recent parameters, metals marginally firmer.Looking ahead, US Building Permits, CNB Policy Announcement; NATO Summit, Fed SLR meeting, BoE's Lombardelli; Fed's Powell; US President Trump, Supply from the US, and Earnings from General Mills, Paychex, Micron.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

In this episode, Konstantin Boehmer, Portfolio Manager and Head of Fixed Income, shares his outlook on central bank policy heading into the summer. He discusses the Fed's cautious stance as it navigates persistent inflation and slowing growth, highlighting the critical role of labour market data in shaping future decisions. Konstantin also examines the evolving market perception of the “One Big Beautiful Bill,” explaining why fiscal concerns may be overstated and how bond markets are adjusting. Finally, he explores the potential for future rate cuts by the Bank of Canada and flags key risks on the horizon, from rising geopolitical tensions to renewed tariff pressures. This episode was recorded on June 19, 2025.

Investors with an appetite for investing in themes are increasingly including private market strategies, according to the Thematics Barometer global survey of decision makers. Discussing this year's results with Chief Market Strategist Daniel Morris, Christopher Dunn, Head of Investment Management for Europe for Coalition Greenwich, notes the leading themes include renewable and clean energy, and that interest in artificial intelligence is ‘really off the page'.For more insights, visit Viewpoint: https://viewpoint.bnpparibas-am.com/Download the Viewpoint app: https://onelink.to/tpxq34Follow us on LinkedIn: https://bnpp.lk/amHosted by Ausha. See ausha.co/privacy-policy for more information.

Morgan Stanley's Chief Asia Equity Strategist Jonathan Garner explains why Indian equities are our most preferred market in Asia.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I'm Jonathan Garner, Morgan Stanley's Chief Asia Equity Strategist. Today I'll discuss why we remain positive on India's long-term equity story.It's Tuesday, the 24th of June at 9am in Singapore.We've had a long-standing bullish outlook on the India economy and its stock market. In the last five years MSCI India has delivered a total return in U.S. dollars of 145 percent versus 94 percent for global equities and just 39 percent for emerging markets. Indian equities are our most preferred market within Asia for three key reasons. First, India's superior economic and earnings growth. Second, lower exposure to trade tariffs. And third, a strong domestic investor base. And all of this adds up to structural outperformance not just in Asia but indeed globally, and with significantly lower volatility than peer group markets. So let's dive deeper. To start with – the macroeconomic backdrop. We expect India to account for 20 percent of overall incremental global GDP growth in the coming decade. Manufacturing competitiveness is improving thanks to bolstered infrastructure in power, ports, roads, freight transport systems as well as investments in social infrastructure such as water, sewage and hospitals. Additionally, India's growing middle class offers market opportunities to companies across many product categories. There's robust domestic consumption, a strong investment cycle led by public and private capital expenditure and continuing structural reforms, including in the legal sphere. GDP growth in the first quarter was more than 7 percent and our team expects over 6 percent in the medium term, which would be by far the highest of the major economies. Furthermore, we continue to expect robust corporate earnings growth. Since the end of COVID, MSCI India has delivered around 12 percent per annum [U.S.] dollar earnings per share growth versus low single digits for Emerging Markets overall. And we forecast 14 percent and 16 percent over the next two fiscal years. Growth drivers in the short term include an emerging private CapEx cycle, re-leveraging of corporate balance sheets, and a structural rise in discretionary consumption – signaling increased business and consumer confidence, after last year's elections. Another key reason that we're positive on India currently is its lower-than-average vulnerability to ongoing trade and tariff disputes between the U.S. and its trade partners. Exports of goods to the U.S. amount to only 2 percent of India's GDP versus, for example, 10 percent in Thailand or 14 percent in Taiwan. And India's total goods exports are only around 12 percent of GDP. Moreover, for the time being, India's very large services sector's exports are not exposed to tariff actions, and are actually early beneficiaries of AI adoption. Finally, India's strong individual stock ownership means that there's persistent retail buying, which underpins the equity market. Systematic Investment Plan (SIP) flows driven by a young urbanizing population are making new highs, and in May amounted to over U.S.$3 billion. They provide consistent capital inflows. That means that this domestic bid on stocks is unlikely to fade anytime soon. This provides a strong foundation for the market and supports valuations which are slightly above emerging market averages. It also means that its market beta to global equities are low and falling, approximately 0.4 versus 1.1 ten years ago. And price volatility is well below other emerging markets. All told, making India an attractive play in volatile times. Thanks for listening. If you enjoy the show, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.

Our conversation outlines the current landscape for fixed income investors and where to locate opportunity within the asset class. We also discuss the convergence of public and private credit, along with the risks and opportunities within private credit to be mindful of. Featured are Leslie Falconio, Head of Taxable Fixed Income Strategy Americas, UBS Chief Investment Office, and Amanda Lynam, Head of Macro Credit Research within the Portfolio Management Group, BlackRock. Host: Daniel Cassidy

Fed Chair Powell addresses legislators today and may be asked about dovish remarks from policy makers. Separately, Middle East developments remain top of mind, and FedEx reports.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.(0130-0625)

Sentiment bolstered after US President Trump announced a ceasefire agreement between Iran and Israel, effective 05:00 BST / 00:00 EDT.Though Israel claimed Iran had launched ballistic missiles and violated the agreement, which Iran has denied.USD softer as geopolitical premium recedes, attention now turns to Fed Chair Powell who testifies before the House.Bonds hold a bearish bias given latest Iran-Israel ceasefire; USTs are lower by a handful of ticks whilst Bunds are hit on updates via the German Finance Ministry.Crude clipped by the ceasefire, XAU loses its shine, base metals find a floor.Looking ahead, Canadian Inflation, US Consumer Confidence, NZ Trade, NATO Summit, NBH Policy Announcement, BoE's Bailey, Ramsden, Pill, Breeden; ECB's Lagarde, de Guindos, Lane; Fed's Powell, Hammack, Williams, Collins, Barr, Supply from the US, Earnings from FedEx, Carnival.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

Risk was supported on Wall Street following Iran's "symbolic" strike on a US base in Qatar—de-escalatory in nature, given the clear effort to minimise casualties and collateral damage.Sentiment was further bolstered at the resumption of futures trading after US President Trump announced a ceasefire agreement between Iran and Israel, effective 05:00 BST.Israeli strikes were continuous as markets headed into Iran's proposed ceasefire time (01:30 BST) vs Trump's guided time (05:00 BST).Crude oil tumbled 9% on Monday, with losses of almost 3% seen heading into the European open.European equity futures are indicative of a positive open with the Euro Stoxx 50 future +1.2% after cash closed -0.2% on Monday.Looking ahead, highlights include German Ifo, Canadian Inflation, US Consumer Confidence, NZ Trade, NBH Policy Announcement, BoE's Bailey, Greene, Ramsden, Pill, Breeden; ECB's Lagarde, de Guindos, Lane; Fed's Powell, Hammack, Williams, Collins, Barr, NATO summit, Supply from UK, Germany, US, Earnings from FedEx, Carnival.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

This episode of Fixed on ESG unravels the perils of fast fashion, the environmental footprint, transparency challenges, and opportunities for innovation. We highlight the role of different stakeholders across the value chain in driving change towards a more sustainable future. Samantha Van Belle, ESG Specialist at PGIM Fixed Income, hosts this discussion with Alice Roche-Naude, Sustainability Strategy Director at Futerra, and Nuvneet Dhillon, CFA, ESG Specialist at PGIM Fixed Income. Recorded on June 12, 2025.

Our CIO and Chief U.S. Equity Strategist Mike Wilson explains why investors have largely remained calm amid recent developments in the Middle East.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley's CIO and Chief U.S. Equity Strategist. Today on the podcast I'll be discussing how to think about the tensions in the Middle East for U.S. equities. It's Monday, June 23rd at 11:30am in New York. So, let's get after it. Over the weekend, the United States executed a surprise attack on Iran's nuclear enrichment facilities. While the extent of the damage has yet to be confirmed, President Trump has indicated Iran's nuclear weapon development efforts have been diminished substantially, if not fully. If true, then this could be viewed as a peak rate of change for this risk. In many ways this fits our overall narrative for U.S. equities that we have likely passed the worst for many risks that were weighing on stocks in the first quarter of the year. Things like immigration enforcement, fiscal spending cuts, tariffs and AI CapEx deceleration all contributed to dragging down earnings forecasts. Fast forward to today and all of these items have peaked in terms of their negative impact, and earnings forecasts have rebounded since Mid-April. In fact, the rebound in earnings revision breadth is one of the sharpest on record and provides a fundamental reason for why U.S. stocks have been so strong since bottoming the week of April 7th. Add in the events of this past weekend and it makes sense why equities are not selling off this morning as many might have expected. For further context, we looked at 23 major geopolitical events since 1950 and the impact on stock prices. What we found may surprise listeners, but it is a well understood fact by seasoned investors. Geopolitical shocks are typically followed by higher, not lower equity prices, especially over 6 to12 months. Only five of the 23 outcomes were negative. And importantly, all the negative outcomes were accompanied by oil prices that were at least 75 percent higher on a year-over-year basis. As of this morning, oil prices are down 10 percent year-over-year and this is after the actions over the weekend. In other words, the conditions are not in place for lower equity prices on a 6 to12 month horizon. Having said that, we continue to recommend large cap higher quality equities rather than small cap lower quality names. This is mostly a function of sticky long term interest rates and the fact that we remain in a late cycle environment in which the Fed is on hold. Should that change and the Fed begin to signal rate cuts, we would pivot to a more cyclical areas of the market. Our favorite sectors remain Industrials which are geared to higher capital spending for power and infrastructure, Financials which will benefit from deregulation this fall and software stocks that remain immune from tariffs and levered to the next area of spending for AI diffusion across the economy. We also like Energy over consumer discretionary as a hedge against the risk of higher oil prices in the near term. Thanks for tuning in; I hope you found today's episode informative and useful. Let us know what you think by leaving us a review; and if you find Thoughts on the Market worthwhile, tell a friend or colleague to try it out!

Markets remain range-bound amid low volatility as investors take a "wait-and-see" approach ahead of some key deadlines. Elsewhere, Powell gets ready to address Congress.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.(0130-0625)

US President Trump confirmed the launch of “Operation Midnight Hammer”, which involved targeted strikes on Iranʼs nuclear facilities at Fordow, Natanz, and Isfahan.US President Trump warned that “many targets remain,” emphasising that the US had no desire for regime change but threatened larger future strikes if Iran failed to engage diplomatically.The Iranian parliament has approved the closure of the Strait of Hormuz after the US launched strikes against the countryʼs nuclear facilities. Iranʼs security body will make the final decision on whether to proceed with the plan, state television reported. Iran is weighing its response, with its Foreign Minister saying “all options” are on the table after Washington proved “they only understand the language of threat and force”, according to CNN.US President Trump to meet with National Security team at 13:00 EDT/18:00 BST on Monday, according to Bloomberg. Separately, a special IAEA board meeting is also scheduled for Monday.Initial market reaction saw crude higher, havens bid and equity futures softer; however, the move has since largely dissipated, potentially on hopes the strike is a "one and done" situation.Looking ahead, highlights include French, German, EZ, UK, US Flash PMIs, ECB President Lagarde; Fed's Goolsbee, Kugler, Supply from EU, Trump's National Security meeting.Click for the Newsquawk Week Ahead.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

US President Trump confirmed the launch of “Operation Midnight Hammer”, which involved targeted strikes on Iranʼs nuclear facilities at Fordow, Natanz, and Isfahan.US President Trump warned that “many targets remain,” emphasising that the US had no desire for regime change but threatened larger future strikes if Iran failed to engage diplomatically.The Iranian parliament has approved the closure of the Strait of Hormuz after the US launched strikes against the countryʼs nuclear facilities. Iranʼs security body will make the final decision on whether to proceed with the plan, state television reported. Iranian Foreign Minister said “all options” are on the table.European bourses opened lower in reaction to US-Iran but some managed to climb into the green as the session progressed; US equities are modestly firmer.DXY benefits from the US attack on Iran and currently trades near session highs, JPY the clear G10 laggard.Brief upside in fixed income gives way to energy-induced inflation concern, bearish bias added to by the improving equity tone.Brent gapped higher by 5% at the open in reaction to US strikes on Iran, but has since entirely pared that move.Looking ahead, US Flash PMIs, ECB President Lagarde; Fed's Goolsbee, Kugler, Supply from EU, and Trump's National Security meeting.Read the full report covering Equities, Forex, Fixed Income, Commodites and more on Newsquawk

Our analysts Andrew Sheets and Kelvin Pang explain why international issuers may be interested in so-called ‘dim sum' bonds, despite Asia's growth drag.Read more insights from Morgan Stanley.----- Transcript -----Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley. Kelvin Pang: And I'm Kelvin Pang, Head of Asia Credit Strategy. Andrew Sheets: And today in the program we're going to finish our global tour of credit markets with a discussion of Asia. It's Friday, June 20th at 2pm in London. Kelvin Pang: And 9pm in Hong Kong. Andrew Sheets: Kelvin, thank you for joining us. Thank you especially for joining us so late in your day – to complete this credit World tour. And before we get into the Asia credit market, I think it would just be helpful to frame at a very high level – how you see the economic picture in the region. Kelvin Pang: We do think that the talks and potential deals will probably provide some reprieve towards the growth for the region, but not a big relief. We do think that tariff uncertainty will linger here, and it will keep growth low here; especially if we do think that CapEx of the region will be weaker due to tariff uncertainty. A weaker U.S. dollar, for example, plus monetary easing will help offset some of this growth drag. But overall, we do think that the Asia region could see 90 basis point down in real GDP growth from last year. Andrew Sheets: So, we've got weaker growth in Asia as a function of high tariffs and high tariff uncertainty that can't be offset by further policy easing. In the context of that weaker growth backdrop, higher uncertainty – are credit spreads in the region wide? Kelvin Pang: No, they're actually really low. They're probably at like the lowest since we start having a data in 2013. So definitely like a 12 to 13 year low of the range. Andrew Sheets: And so why is that? Why do you have this kind of seemingly odd disconnect between some real growth challenges? And as you just mentioned, really some of the tightest credit spreads, some of the lowest risk premiums that we've seen in quite some time? Kelvin Pang: Yeah, we get this question a lot from clients, and the short answer is that, you know, the technicals, right? Because the last two years, two-three years, we've been seeing negative net supply for Asia credit. A lot of that is driven by China credit. And if you look at year-to-date, non supply remain still negative net supply. And demand side, for example, has not really picked up that strongly. But it still offsets any outflows that we see the last two-three years; is offset by this negative net supply. So, you put this two together, we have this very strong technicals that support very tight spread. And that's why spread has been tight at historical end in the last, I would say, one to two years. Andrew Sheets: Do you see this changes? Kelvin Pang: Yeah, we do think it's changed. We have a framework that we call the normalization of Asia Credit technicals. And for that to change, essentially our framework is saying that Treasury yields use need to go down, and dollar funding need to go down. Cheaper dollar funding will bring back issuers. Net supply should pick up. Demand for credit tends to do well in a rate cut cycle. Demand tends to pick up in a rate cut cycle. So, if we have these two supports, we do think that Asia credit technicals will normalize. It's just that, you know, we have four stages of normalization. Unfortunately we are in stage two now, and we still have a bit of room to see some further normalization, especially if we don't get rate cuts. Andrew Sheets: Got it. So, you know, we do think that if Morgan Stanley's yield forecasts are correct, yields are going to fall. Issuers will look at those lower yields as more attractive. They'll issue more paper in Asia and that will kind of help rebalance the market some. But we're just not quite there yet. Kelvin Pang: Yeah, we feel like this road to rate cuts has been delayed a few times, in the last two-three years. And that has really been a big conundrum for a lot of Asia credit investors. So hopefully third time's a charm, right. So next year's a big year. Andrew Sheets: So, I guess while we're waiting for that, you also have this dynamic where for companies in Asia, or I guess for any company in the world, borrowing money locally in Asia is quite cheap. You have very low yields in China. You have very low local yields in Japan. How do those yields compare with the economics of borrowing in dollars? And what do you think that, kind of, means for your market? Kelvin Pang: Yeah, I think the short answer is that we are going to see more foreign issuers in local currency market. And, you know, we wrote a report in in March to just to pick on the dim sum corporate bond market. It benefits… Andrew Sheets: And Kelvin, just to stop you there, could you just describe to the listener what a dim sum bond is? And probably why you don't want to eat it? Kelvin Pang: Yes. So dim sum bond is basically a bond denominator in CNH. So, CNH is a[n] offshore Chinese renminbi, sort of, proxy. And it's called dim sum because it's like the most local cuisine in Hong Kong. Most – a lot of dim sum bonds are issued in Hong Kong. A lot of these CNH bonds are issued in Hong Kong, And that's why, [it has] this, you know, sort nickname called dim sum. Andrew Sheets: So, what is the outlook for that market and the economics for issuers who might be interested in it? Kelvin Pang: Yeah. We think it's a great place for global issuers who have natural demand for renminbi or CNH to issue; 10 years CGB is now is like 1.5-1.6 percent. That makes it a very attractive yield. And for a lot of these multinationals, they have natural renminbi needs. So, they don't need to worry about the hedging part of it. And what – and for a lot of investor base, the demands are picking up because we are seeing that renminbi internationalization are making some progress. You know, progress in that means better demand. So, overall, we do think that there is a good chance that the renminbi market or the dim sum market can be a bit more global player – or global, sort of, friendly market for investors. Andrew Sheets: Kelvin, another sector I wanted to ask you about was the China property sector. This was a sector that generated significant headlines over the last several years. It's faced significant credit challenges. It's very large, even by global standards. What's the latest on how China Property Credit is doing and how does that influence your overall view? Kelvin Pang: it's been four plus years, since first default started. and we've been through like 44 China property defaults, close to about 127 billion of total dollar bonds that defaulted. So, we are close to the end of the default cycle. Unfortunately, the end or default cycle doesn't mean that we are in the recovery phase, or we are in the speedy recovery phase. We are seeing a lot of companies struggling to come out restructuring. There are companies that come out restructuring and re-enter defaults. So, we do think that it is a long way to go for a lot of these property developers to come out restructuring and to get back to a going concern, kind of, status – I think we are still a bit far. We need to see the recovery in the physical property markets. And for that to happen, we do need to see the China economy to pick up, which give confidence to the home buyers in that sense. Andrew Sheets: So, Kelvin, we started this conversation with this kind of odd disconnect that kind of defines your market. You have a region that has some of the most significant growth risks from tariffs, some of the highest tariff exposure, and yet also has some of the lowest credit risk premiums with these quite tight spreads. If you look more broadly, are there any other kind of disconnects in your market that you think investors around the world should be aware of? Kelvin Pang: Yeah, we do think that investors need to take advantage of the disconnect because what we have now is a very compressed spread. And we like to be in high quality, right? Whether it is switching our Asia high yield into Asia investment grade, whether it is switching out of, you know, BBB credit into A credit. We think, you know, investors don't lose a lot of spread by doing that. But they manage to pick out higher quality credit. At the same time, we do think that one thing unique about Asia credit is that we have significant exposure to tariff risk. Asia countries are one of the few that are, you know; seven out the 10 countries that are having trade surplus with the U.S. And that's why we think that the iTraxx Asia Ex-Japan CDS index could be a good way to get exposure to tariffs. And the index did very well during the Liberation Day sell off. Now it's trading back to more like normal level of 70-75 basis point. We do think that, you know, for investors who want long tariff with risk, that could be a good way to add risk. Andrew Sheets: Kelvin, it's been great talking to you. Thanks for taking the time to talk. Kelvin Pang: Thank you, Andrew. Andrew Sheets: And thank you listeners as always, for your time. If you find Thoughts of the Market useful, let us know by leaving a review wherever you listen. And also tell a friend or colleague about us today.

Markets barely moved late Wednesday after the Fed meeting and before Thursday's holiday. Geopolitical concerns and "triple-witching" volatility could affect today's trading.Important DisclosuresThe information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request.Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.Investing involves risk, including loss of principal.Diversification strategies do not ensure a profit and do not protect against losses in declining markets.Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions.The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.(0130-0625)

Mike Sanders dives into fixed income markets after the FOMC left rates unchanged this week. “Not all parts of the [yield] curve are equal,” he says – he prefers medium duration to long duration right now. “You have to be very nimble and active.” He expects two rate cuts, in September and December, but notes that vision is in flux depending on economic data.======== Schwab Network ========Empowering every investor and trader, every market day.Subscribe to the Market Minute newsletter - https://schwabnetwork.com/subscribeDownload the iOS app - https://apps.apple.com/us/app/schwab-network/id1460719185Download the Amazon Fire Tv App - https://www.amazon.com/TD-Ameritrade-Network/dp/B07KRD76C7Watch on Sling - https://watch.sling.com/1/asset/191928615bd8d47686f94682aefaa007/watchWatch on Vizio - https://www.vizio.com/en/watchfreeplus-exploreWatch on DistroTV - https://www.distro.tv/live/schwab-network/Follow us on X – / schwabnetwork Follow us on Facebook – / schwabnetwork Follow us on LinkedIn - / schwab-network About Schwab Network - https://schwabnetwork.com/about

Jonny Goulden and Saad Siddiqui discuss the latest market developments and their impacts for the EM fixed income asset class. This podcast was recorded on 20 June 2025. © 2025 JPMorgan Chase & Co. All rights reserved. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan. It is strictly prohibited to use or share without prior written consent from J.P. Morgan any research material received from J.P. Morgan or an authorized third-party (“J.P. Morgan Data”) in any third-party artificial intelligence (“AI”) systems or models when such J.P. Morgan Data is accessible by a third-party. It is permissible to use J.P. Morgan Data for internal business purposes only in an AI system or model that protects the confidentiality of J.P. Morgan Data so as to prevent any and all access to or use of such J.P. Morgan Data by any third-party.

Our Global Commodities Strategist Martijn Rats explores three possible scenarios for oil prices in light of geopolitical shifts in the Middle East.Important note regarding economic sanctions. This research may reference jurisdiction(s) or person(s) which are the subject of sanctions administered or enforced by the U.S. Department of the Treasury's Office of Foreign Assets Control (“OFAC”), the United Kingdom, the European Union and/or by other countries and multi-national bodies. Any references in this report to jurisdictions, persons (individuals or entities), debt or equity instruments, or projects that may be covered by such sanctions are strictly incidental to general coverage of the relevant economic sector as germane to its overall financial outlook, and should not be read as recommending or advising as to any investment activities in relation to such jurisdictions, persons, instruments, or projects. Users of this report are solely responsible for ensuring that their investment activities are carried out in compliance with applicable sanctions.Read more insights from Morgan Stanley.----- Transcript -----Martijn Rats: Welcome to Thoughts on the Market. I'm Martin Rats, Morgan Stanley's Global Commodity Strategist. Today I'll talk about oil price dynamics amidst escalating tensions between Israel and Iran. It's Wednesday, June 18th at 3pm in London. Industry watchers with an eye on the Brent Forward Curve recently noticed a rare smile shape: downward sloping in the first couple of months, but then an upward sloping curve later this year, and into 2026. Now that changed last Friday. The oil market creates these various shapes in the Forward Curve, depending on how it sees the supply demand balance. When the forward curve is downward sloping, holding inventory really is quite unattractive; so typically, operators release barrels from storage under those conditions. The market creates that structure when the conditions are tight, and barrels indeed need to be released from storage.Now on the other end, when the market is oversupplied, oil needs to be put into inventory, and the market makes this possible by creating an upward sloping curve. So, the curve that existed until only recently told the story of some near-term tightness first, but then a substantial surplus later this year and into 2026. Now when the tensions in the Middle East escalated late last week, the oil complex responded strongly. But not only did the front-month Brent future, i.e. oil for delivery next month rise quite sharply by about 17 percent, the impact of the conflict was also felt across all future delivery dates. By now, the entire forward curve is downward sloping, which means that the oil market no longer is pricing in any surplus next year – a big change from only a few days ago. Now, no doubt, Friday's events have sharply widened the range of possible future oil price paths. However, looking ahead, we would argue that oil prices fall in three main scenarios. Together they provide a framework to navigate the oil market in the next couple of weeks and months. First, let's consider the most benign scenario. Military conflict does not always correlate with disruptions to oil supply, even in major oil producing regions. So far, there is no reduction in supply from the region. If oil and gas infrastructure remains out of the crosshairs, it is entirely possible that that continues. In that case, we might see brand prices retract to around about $60 per barrel, down from the current level of about $76 per barrel.Our second scenario recognizes that Iran's oil exports could be at risk either because of attacks on physical infrastructure or because of sanctions – mirroring the reductions that we saw during 2018's Maximum Pressure Campaign by the United States. If Iran were to lose most of its export capacity, that would broadly offset the surplus that we are currently modeling for the oil market next year, which would then in turn leave a broadly balanced market. Now in a balanced oil market, oil prices are probably in a $75 to $80 per barrel range. The third and most severe scenario encompasses a broad regional disruption, possibly pushing prices as high as 2022 levels of around $120 a barrel. Now, that could unfold if Iran targets oil infrastructure across the wider Gulf region, including critical routes like the Strait of Hormuz, through which a significant portion of the world's oil transits. The situation remains very fluid, and we could see a wide spectrum of potential oil price outcomes. We believe the most likely scenario remains the first – our base case – with supply eventually remaining stable. However, the probabilities of the more severe disruptions whilst currently still lower, still justify a risk premium of about $10 per barrel for the foreseeable future. As we monitor these developments, investors should stay alert to signs such as further attacks on all infrastructure or escalations in sanctions, which could signal shifts towards our more severe scenarios. Thanks for listening. If you enjoyed the show, please leave us a review wherever you listen. And share Thoughts on the Market with a friend or colleague today.

Our Senior Japan Economics Advisor discusses Japan's systematic approach to AI and the lessons it offers for other markets.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I'm Robert Feldman, Senior Advisor at Morgan Stanley MUFG Securities in Tokyo. Today I'd like to discuss Japan's crucial contributions in global AI development.It's Tuesday, June 17, at 2 PM in Tokyo.Japan has always been a world leader in advanced technology infrastructure and robotics. So it comes as no surprise that Japanese devices and materials play critical roles in the global AI supply chain. For investors, however, it's vital to understand Japan's unique systematic approach to AI and the lessons it offers other countries. In Japan, AI has historically developed through this symbiotic interaction of four elements: Hardware, Software, Data, and Ethics. Japanese technology advances not only evolve, but they co-evolve – meaning that advances in one element make advances in others more urgent. And when those latter advances occur, chokepoints arise in yet other elements. However, unlike co-evolution in nature, where chance mutations just happen to reinforce each other, co-evolution in AI is driven by human intent. That is, humans see a chokepoint and address it with innovation. These chokepoints – or bottlenecks in development – they're crucial to the way we think about AI. Identifying the chokepoints allows firms and industries to innovate. And Investors should also pay particular attention to these chokepoints because that's where the investment opportunities are. For example, at a recent event, we asked a medium-sized Japanese retail food manufacturing company president – who is an energetic AI advocate – which factor was the biggest chokepoint for his firm. And he replied unequivocally, immediately, “Data.” His firm has some data; so do his competitors. But there is no common protocol for recording the data, contributing information to a common database, and still maintaining anonymity. So clearly, the chokepoint around Data suggests that this company will need innovative data solutions so that it can then take advantage of the other three key elements: the Hardware, the Software, and the Ethics. Ethics is crucial because people won't use AI unless there is an ethical basis. So in terms of this element – the ethics element – Japan's commitment to ethical AI development has been very flexible. On one hand, Japan has robust legal frameworks, like the Act for the Protection of Personal Information and subsequent amendments. These laws ensure that AI advances within a secure and ethical boundary. And the laws are not just on paper. They are actively enforced. A few years ago there was a landmark court ruling that upheld data privacy against unauthorized AI use. However, Japan also is flexible. The data rules are tweaked, to allow more practical approach to developing large language models. Another unique part of Japan's approach to ethics is the proactive emphasis on AI literacy. From corporate giants to small businesses, there is a concerted effort to train personnel not just in the AI technology but also in the ethical application, and thus ensure this well-rounded acceptable advancement in AI capability. This approach to training workers is not just altruism; Japan faces a severe labor shortage, and AI is widely viewed as a critical part of the solution. So good ethics are bringing faster AI diffusion. Ultimately, on a global macroeconomic level, the winners from AI will be the corporations and the nations that do three things: First quickly introduce the technology; second, rapidly innovate new products and processes that use AI; and third, retrain labor and reallocate capital to produce these new and innovative products. With this macro backdrop, Japan's intentional use of the symbiosis between Hardware, Software, Data, and Ethics gives Japan some unique advantages in accelerating AI diffusion and spurring economic growth. Thanks for listening. If you enjoy the show, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.

While market sentiment on U.S. large caps turns cautious, our Chief CIO and U.S. Equity Strategist Mike Wilson explains why there's still room to stay constructive.Read more insights from Morgan Stanley.----- Transcript -----Welcome to Thoughts on the Market. I'm Mike Wilson, Morgan Stanley's CIO and Chief U.S. Equity Strategist. Today on the podcast, I'll be discussing why we remain more constructive than the consensus on large cap U.S. equities – and which sectors in particular. It's Monday, June 16th at 9:30am in New York. So, let's get after it. We remain more constructive on U.S. equities than the consensus mainly because key gauges we follow are pointing to a stronger earnings backdrop than others expect over the next 12 months. First, our main earnings model is showing high-single-digit Earnings Per Share growth over the next year. Second, earnings revision breadth is inflecting sharply higher from -25 percent in mid-April to -9 percent today. Third, we have a secondary Earnings Leading model that takes into account the cost side of the equation; and that one is forecasting mid-teens Earnings Per Share growth by the first half of 2026. More specifically, it's pointing to higher profitability due to cost efficiencies. Interestingly, this was something we heard frequently last week at the Morgan Stanley Financials Conference with many companies highlighting the adoption of Artificial Intelligence to help streamline operations. Finally, the most underappreciated tailwind for S&P 500 earnings remains the weaker dollar which is down 11 percent from the January highs. As a reminder, our currency strategists expect another 7 percent downside over the next 12 months. The combination of a stronger level of earnings revisions breadth and a robust rate of change on earnings revisions breadth since growth expectations troughed in mid-April is a powerful tailwind for many large cap stocks, with the strongest impact in the Capital Goods and Software industries. These industries have compelling structural growth drivers. For Capital Goods, it's tied to a renewed focus on global infrastructure spending. The rate of change on capacity utilization is in positive territory for the first time in two and a half years and aggregate commercial and industrial loans are growing again, reaching the highest level since 2020. The combination of structural tech diffusion and a global infrastructure focus in many countries is leading to a more capital intensive backdrop. Bonus depreciation in the U.S. should be another tailwind here – as it incentivizes a pickup in equipment investment, benefitting Capital Goods companies most directly. Meanwhile, Software is in a strong position to drive free cash flow via GenAI solutions from both a revenue and cost standpoint. Another sector we favor is large cap financials which could start to see meaningful benefits of de-regulation in the second half of the year. The main risk to our more constructive view remains long term interest rates. While Wednesday's below consensus consumer price report was helpful in terms of keeping yields contained, we find it interesting that rates did not fall on Friday with the rise in geopolitical tensions. As a result, the 10-year yield remains in close distance of our key 4.5 percent level, above which rate sensitivity should increase for stocks. On the positive side, interest rate volatility is well off its highs in April and closer to multi-year lows. Our long-standing Consumer Discretionary Goods underweight is based on tariff-related headwinds, weaker pricing power and a late cycle backdrop, which typically means underperformance of this sector. Staying underweight the group also provides a natural hedge should oil prices rise further amid rising tensions in the Middle East. We also continue to underweight small caps which are hurt the most from higher oil prices and sticky interest rates. These companies also suffer from a weaker dollar via higher costs and a limited currency translation benefit on the revenue side given their mostly domestic operations. Finally, the concern that comes up most frequently in our client discussions is high valuations. Our more sanguine view here is based on the fact that the rate of change on valuation is more important than the level. In our mid-year outlook, we showed that when Earnings Per Share growth is above the historical median of 7 percent, and the Fed Funds Rate is down on a year-over-year basis, the S&P 500's market multiple is up 90 percent of the time, regardless of the starting point. In fact, when these conditions are met, the S&P's forward P/E ratio has risen by 9 percent on average. Therefore, our forecast for the market multiple to stay near current levels of 21.5x could be viewed as conservative. Should history repeat and valuations rise 10 percent, our bull case for the S&P 500 over the next year becomes very achievable. Thanks for tuning in; I hope you found this episode informative and useful. Let us know what you think by leaving us a review; and if you find Thoughts on the Market worthwhile, tell a friend or colleague to try it out!

Our economists Michael Gapen and Sam Coffin discuss how a drop in immigration is tightening labor markets, and what that means for the U.S. economic outlook and Fed policy. Read more insights from Morgan Stanley.----- Transcript -----Michael Gapen: Welcome to Thoughts on the Market. I'm Michael Gapen, Morgan Stanley's Chief U.S. Economist.Sam Coffin: And I'm Sam Coffin, Senior Economist on our U.S. Economics research team.Michael Gapen: Today we're going to have a discussion about the potential economic consequences of the administration's shift in immigration policies. In particular, we'll focus much of our attention on the influence that immigration reform is having on the U.S. labor market. And what it means for our outlook on Federal Reserve policy.It's Friday, June 13th at 9am in New York.So, Sam, news headlines have been dominated by developments in the President's immigration policies; what is being called by, at least some commentators, as a toughening in his stance.But I'd like to set the stage first with any new information that you think we've received on border encounters and interior removals. The administration has released new data on that recently that covered at least some of the activity earlier this year. What did it tell you? And did it differ markedly from your expectations?Sam Coffin: What we saw at first was border encounters falling sharply to 30,000 a month from 200,000 or 300,000 a month last year. It was perhaps a surprise that they fell that sharply. And on the flip side, interior removals turned out to be much more difficult than the administration had suggested. They'd been targeting maybe 500,000 per year in removals, 1500 a day. And we're hitting a third or a half of that pace.Michael Gapen: So maybe the recent escalation in ICE raids could be in response to this, right? The fact that interior removals have not been as large as some in the administration would desire.Sam Coffin: That's correct. And we think those efforts will continue. The House Budget Reconciliation Bill, for example, has about $155 billion more in the budget for ICE, a large increase over its current budget. This will likely mean greater efforts at interior removals. About half of it goes to stricter border enforcement. The other half goes to new agents and more operations. We'll see what the final bill looks like, but it would be about a five-fold increase in funding.Michael Gapen: Okay. So much fewer encounters, meaning fewer migrants entering the U.S., and stepped-up enforcement on interior removals. So, I guess, shifting gears on the back of that data. Two important visa programs have also been in the news. One is the so-called CHNV Parole Program that's allowed Cubans, Haitians, Nicaraguans, and Venezuelans to enter the U.S. on parole. The Supreme Court recently ruled that the administration could proceed with removing their immigration status.We also have immigrants on TPS, or Temporary Protected Status, which is subject to periodic removal; if the administration determines that the circumstances that warranted their immigration into the U.S. are no longer present. So, these would be immigrants coming to the U.S. in response to war, conflict, environmental disasters, hurricanes, so forth.So, Sam, how do you think about the ramping up of immigration controls in these areas? Is the end of these temporary programs important? How many immigrants are on them? And what would the cancellation of these mean in terms of your outlook for immigration?Sam Coffin: Yeah, for CHNV Paroles, there are about 500,000 people paroled into the U.S. The Supreme Court ruled that the administration can cancel those paroles. We expect now that those 500,000 are probably removed from the country over the next six months or so. And the temporary protected status; similarly, there are about 800,000 people on temporary protected status. About 600,000 of them have their temporary status revoked at this point or at least revoked sometime soon. And it looks like we'll get a couple hundred thousand in deportations out from that program this year and the rest next year.The result is net immigration probably falling to 300,000 people this year. We'd expected about a million, when we came into this year, but the faster pace of deportation takes that down. So, 300,000 this year and 300,000 next year, between the reduction in border encounters and the increase in deportations.Michael Gapen: So that's a big shift from what we thought coming into the year. What does that mean for population growth and growth in the labor force? And how would this compare – just put it in context from where we were coming out of the pandemic when immigration inflows were quite large.Sam Coffin: Yeah. Population growth before the pandemic was running 0.5 to 0.75 percent per year. With the large increase in immigration, it accelerated 1-1.25 percent during the years of the fastest immigration. At this point, it falls by about a point to 0.3-0.4 percent population growth over the next couple of years.Michael Gapen: So almost flat growth in the labor force, right? So, translate that into what economists would call a break-even employment rate. How much employment do you need to push the unemployment rate down or push the unemployment rate up?Sam Coffin: Yeah, so last year – I mean, we have the experience of last year. And last year about 200,000 a month in payroll growth was consistent with a flat unemployment rate. So far this year, that's full on to 160,000-170,000 a month, consistent with a flat unemployment rate. With further reduction in labor force growth, it would probably decline to about 70,000 a month. So much slower payrolls to hold the unemployment rate flat.Michael Gapen: So, as you know, we've taken the view, Sam, that immigration controls and restrictions will mean a few important things for the economy, right? One is fewer consuming households and softening demand, but the foreign-born worker has a much higher participation rate than domestic workers; about 4 to 5 percentage points higher.So, a lot less labor force growth, as you mentioned. How have these developments changed your view on exactly how hard it's going to be to push the unemployment rate higher?Sam Coffin: So, so far this year, payrolls have averaged about 140,000 a month, and the unemployment rate's been going sideways at 4.2 percent. It's been going sideways since – for about nine months now, in fact. We do expect that payroll growth slows over the course of this year, along with the slowing in domestic demand. We have payroll growth falling around 50,000 a month by late in the year; but the unemployment rate going sideways, 4.3 percent this year because of that decline in breakeven payrolls.For next year, we also have weak payroll growth. We also expect weak payroll growth of about 50,000 a month. But the unemployment rate rising somewhat more to 4.8 percent by the end of the year.Michael Gapen: So, immigration controls really mean the unemployment rate will rise, but less than you might expect and later than you might expect, right? So that's I guess what we would classify as the cyclical effect of immigration.But we also think immigration controls and a much slower growth in the labor force means downward pressure on potential. Where are we right now in terms of potential growth and where's that vis-a-vis where we were? And if these immigration controls go into place, where do we think potential growth is going?Sam Coffin: Well, GDP potential is measured as the sum of productivity growth and growth in trend hours worked. The slower immigration means slower labor force growth and less capacity for hours. We estimated potential growth between 2.5 and 3 percent growth in 2022 to 2024. But we have it falling to 2.0 percent presently – or back to where it was before COVID. If we're right on immigration going forward and we see those faster deportations and the continued stoppage at the border, it could mean potential growth of only 1.5 percent next year.Michael Gapen: That's a big change, of course, from where the economy was just, you know, 12 to 18 months ago. And I'd like to circle back to one point that you made in bringing up the recent employment numbers. In the May job report that was released last week, we also saw a decline in labor force participation. It went down two-tenths on the month.Now, on one hand that may have prevented a rise in the unemployment rate. It was 4.2 but could have been maybe 4.5 percent or so – had the participation rate held constant. So maybe the labor market weakened, and we just don't know it yet. But you have an idea that you've put forward in some of our reports that there might be another explanation behind the drop in the participation rate. What is that?Sam Coffin: It could be that the threat of increased deportations has created a chilling effect on the participation rate of undocumented workers.Michael Gapen: So, explain to listeners what we mean by a chilling effect in participation, right? We're not talking about restricting inflows or actual deportations. What are we referring to?Sam Coffin: Perhaps undocumented workers step out of the workforce temporarily to avoid detection, similar to how people stayed out of the workforce during the pandemic because of fear of infection or need to take care of children or parents. If this is the case, some of the foreign-born population may be stepping out of the labor force for a longer period of time.Michael Gapen: Right. Which would mean the unemployment rate at 4.2 percent is real and does not mask weakness in the labor market. So, whether it's less in migration, more interior removals, or a chilling effect on participation, then the labor market still stays tight.Sam Coffin: And this is why we think the Fed moves later but ultimately cuts more. It's a combination of tariffs and immigration.Michael Gapen: That's right. So, our baseline is that tariffs push inflation higher first, and so the Fed sees that. But if we're right on immigration and your forecast is that the unemployment rate finishes the year at 4.3, then the Fed just stays on hold. And it's not until the unemployment rate starts rising in 2026 that the Fed turns to cuts, right. So, we have cuts starting in March of next year. And the Fed cutting all the way down to 250 to 275.Well, I think altogether, Sam, this is what we know now. It's certainly a fluid situation. Headlines are changing rapidly, so our thoughts may evolve over time as the policy backdrop evolves. But Sam, thank you for speaking with me.Sam Coffin: Thank you very much.Michael Gapen: And thanks for listening. If you enjoy the show, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.

Our analysts Andrew Sheets and Aron Becker explain why European credit markets' performance for the rest of 2025 could be tied to U.S. growth. Read more insights from Morgan Stanley.----- Transcript -----Andrew Sheets: Welcome to Thoughts on the Market. I'm Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley.Aron Becker: And I'm Aron Becker, Head of European Credit Strategy.Andrew Sheets: And today on the program, we're continuing a series of conversations covering the outlook for credit around the world. Morgan Stanley has recently updated its forecast for the next 12 months, and here we're going to bring you the latest views on what matters for European credit.It's Thursday, June 12th at 2pm in London.So, Aron, it's great to have this conversation with you. Today we're going to be talking about the European credit outlook. We talked with our colleague Vishwas in the other week about the U.S. credit outlook. But let's really dive into Europe and how that looks from the perspective of a credit investor.And maybe the place to start is, from your perspective, how do you see the economic backdrop in Europe, and what do you think that means for credit?Aron Becker: Right. So, on the European side, our growth expectations remain somewhat more challenging. Our economists are expecting growth after a fairly strong start to slow down in the back half of this year. The German fiscal package that was announced earlier this year will take time to lift growth further out in 2026. So, in the near term, we see a softening backdrop for the domestic economy.But I think what's important to emphasize here is that U.S. growth, as Vishwas and you have talked about last time around, is also set to decelerate on our economists forecast more meaningfully. And that matters for Europe.Two reasons why I think the U.S. growth outlook matters for European credit. One, nearly a quarter of European companies' revenues are generated in the U.S. And two, U.S. companies themselves have been very actively tapping the European corporate bond markets. And in fact, if you look at the outstanding notion of bonds in the euro benchmarks, the largest country by far is U.S. issuers. And so, I do think that we need to think about the outlook on the macro side, more in a global perspective, when we think about the outlook for European credit. And if we look at history, what we can deduct from the simple correlation between growth and credit spreads is current credit valuations imply growth would be around 3 percent. And that's a stark contrast to our economists' forecast where both Europe and U.S. is decelerating to below 1 percent over the next 12 months.Andrew Sheets: But Aron, you know, you talked about the slow growth, here in Europe. You talked about a slower growth picture in the U.S. You talked about, you know, pretty extensive exposure of European companies into the U.S. story. All of which sound like pretty challenging things. And yet, if one looks at your forecasts for credit spreads, we think they remain relatively tight, especially in investment grade.So, how does one square that? What's driving what might look like, kind of, a more optimistic forecast picture despite those macro challenges?Aron Becker: Right. That's a very important question. I think that it's not all about the growth, and there are a number of factors that I think can alleviate the pressures from the macro side. The first is that unlike in the U.S., in Europe we are expecting inflation to decelerate more meaningfully over the coming year. And we do think that the ECB and the Bank of England will continue to ease policy. That's good for the economy and the eventual rebound. And we also think that it's good for demand for credit products. For yield buyers where the cash alternative is getting less and less compelling, I think they will see yields on corporate credit much more attractive. And I do think that credit yields right now in Europe are actually quite attractive.Andrew Sheets: So, Aron, you know, another question I had is, if you think about some of those dynamics. The fact that interest rates are above where they've been over the last 10 years. You think about a growth environment in Europe, which is; it's not a recession, but growth is, kind of, 1 percent or a little bit below.I mean, some ways this is very similar to the dynamic we had last year. So, what do you think is similar and what do you think is different, in terms of how investors should think about, say, the next 12 months – versus where we've been?Aron Becker: Right. So, what's really similar is, for example, the yield, like I just mentioned. I think the yield is attractive. That hasn't really changed over the past 12 months. If you just think about credit as a carry product, you're still getting around between 3-3.5 percent on an IG corporate bond today.What's really different is that over the same period, the ECB has already lowered front-end rates by 200 basis points. And at the same time, if you think about the fiscal developments in Germany or broader rates dynamics, we've seen a sharp steepening of yield curves; and curves are actually at the steepest levels in two years now. And what this leaves us with is not only high carry from the yield on corporate bonds, but also investors are now rolling down on a much steeper curve if they buy bonds today, especially further out the curve.So, by our estimate, if you aggregate the two figures in terms of your expected total return, credit offers actually total returns much higher than over the past 12 months, and closer to where we were in the LDI crisis in 2022.Andrew Sheets: So, Aron, another development I wanted to ask you about is, if you look at our forecast for the year ahead, our global forecast. One theme is that on the government side there's projected to be a lot more borrowing. There's more borrowing in Germany, and then there's more borrowing in the U.S., especially under certain versions of the current budget proposals being debated. So, you know, it does seem like you have this contrast between more borrowing and kind of a worsening fiscal picture in governments, a better fiscal picture among corporates. We talk about the spread. The spread is the difference between that corporate and government borrowing.So, I guess looking forward first, do you think European companies are going to be borrowing more money? And certainly more money on a relative, incremental basis at these yield levels, which are higher than what they're used to in the past. And, secondly, how do you think about the relative valuation of European credit versus some of the sovereign issuers in Europe, which is often a debate that we'll have with investors?Aron Becker: Big picture? We have seen companies be very active in tapping the corporate bond markets this year. We had a record issuance in May in terms of supply. Now I would push back on the view that that's negative for investors, and expectations for spreads to widen as a result for a number of reasons. One is a lot of gross issuance tends to be good for investors who want to pick up some new issue premiums – as these new bonds do come a little bit cheap to what's out there in terms of available secondary bonds.And second, it creates a lot of liquidity for investors to actually deploy capital, when they do want to enter the bond market to invest. And what we really need to remember here is all this strong issuance activity is coming against very high maturing, volumes of bonds. Redemptions this year are rising by close to 20 percent versus last year. And so, even though we are projecting this year to be a record year for growth issuance from investment grade companies, we think net supply will be lower year-on-year as a result of those elevated, maturities.So overall, I think that's going to be a fairly positive technical backdrop. And as you alluded to it, that's a stark contrast to what the sovereign market is facing at the moment.Andrew Sheets: So, on that net basis, on the amount that they're issuing relative to what they're paying back, that actually is probably looking lower than last year, on your numbers.Aron Becker: Exactly.Andrew Sheets: And finally, Aron, you know, so we've talked a bit about the market dynamics, we've talked about the economic backdrop, we've talked about the issuance backdrop. Where does this leave your thoughts for investors? What do you think looks, kind of, most attractive for those who are looking at the European credit space?Aron Becker: Opportunities are abound, but I think you need to be quite selective of where to actually increase your risk exposure, in my view. One part which we are quite out of consensus on here at Morgan Stanley is our recommendation in European credit to extend duration further out the curve.This goes back to the point I made earlier, that curves are very steep and a lot of that carry and roll down that I think look particularly attractive; you do need to extend duration for that. But there are a number of reasons why I think that that type of trade can work in this backdrop.For one, like I said, valuations are attractive. Two, I also think that from an issuer perspective, it is expensive to tap very long dated bonds now because of that yield dynamic, and I don't necessarily see a lot of supply coming through further out the curve. Three, our rates team do expect curves to bull steepen on the rate side and historically that has tended to favor excess returns further out the curve.And fourth is, a word we love to throw around – convexity. Cash prices further out the curve are very low in investment grade credit. That tends to be actually quite attractive because then even if you get the name wrong, for example, and there are some credit challenges down the line for some of these issuers, your loss given default may be more muted if you entered the bond at a lower cash price.Andrew Sheets: Aron, thanks for taking the time to talk.Aron Becker: Thanks, Andrew. Andrew Sheets: And to our listeners, thank you for sharing a few minutes of your day with us. If you enjoy the show, leave us a review wherever you listen to this podcast and share Thoughts on the Market with a friend or colleague today.