Bloomberg Surveillance Traders Analyze CPI and US-China Developments
5 snips
Dec 11, 2024 
Andrew Sheets, Chief Cross-Asset Strategist at Morgan Stanley, sheds light on inflation trends and the anticipated shifts in monetary policy, describing a hopeful outlook for disinflation. Meanwhile, Elizabeth Economy, a Stanford University professor, shares expert insights into the complex dynamics of US-China relations, detailing China’s political landscape under Xi Jinping and the ramifications for global geopolitics. Both guests discuss strategic implications for investment and economic stability amid evolving international challenges.
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Disinflation and Investment Strategy
- Morgan Stanley predicts disinflation in the first half of 2025, followed by potential inflationary policy effects.
- They advise adding risk, particularly in duration, as bond yields are expected to fall with Fed cuts.
Fixed Income Opportunities
- Consider adding duration as bond yields are expected to fall with Fed and ECB cuts, improving the carry environment.
- Approach credit risk cautiously, with potential for tighter spreads in the first half of 2025 before challenges arise.
Economic Outlook and Uncertainty
- The incoming administration brings both opportunities and risks, widening the range of potential economic outcomes.
- This shift creates the possibility of a market rebound or stagflation, requiring careful consideration.
