Thoughts on the Market

The European Central Bank may soon announce the trial launch of a digital euro. Reza Moghadam, Morgan Stanley's Chief Economic Advisor, digs into potential risks and innovations.

With tensions not abating, investors should prepare for a world where these major economies are significantly less integrated. Michael Zezas explains.

Chief Cross-Asset Strategist Andrew Sheets and Head of Fixed Income Strategy Vishy Tirupattur cover a key topic on the minds of many investors: where to invest now?Mortgage Backed Securities (MBS) and Collateralized Mortgage Obligations (CMO)Principal is returned on a monthly basis over the life of the security. Principal prepayment can significantly affect the monthly income stream and the maturity of any type of MBS, including standard MBS, CMOs and Lottery Bonds. Yields and average lives are estimated based on prepayment assumptions and are subject to change based on actual prepayment of the mortgages in the underlying pools. The level of predictability of an MBS/CMO's average life, and its market price, depends on the type of MBS/CMO class purchased and interest rate movements. In general, as interest rates fall, prepayment speeds are likely to increase, thus shortening the MBS/CMO's average life and likely causing its market price to rise. Conversely, as interest rates rise, prepayment speeds are likely to decrease, thus lengthening average life and likely causing the MBS/CMO's market price to fall. Some MBS/CMOs may have “original issue discount” (OID). OID occurs if the MBS/CMO’s original issue price is below its stated redemption price at maturity, and results in “imputed interest” that must be reported annually for tax purposes, resulting in a tax liability even though interest was not received. Investors are urged to consult their tax advisors for more information. Government agency backing applies only to the face value of the CMO and not to any premium paid.

New macro data on employment and consumer prices are unlikely to settle market uncertainties about inflation and course of the recovery. Mike Wilson explains.

The pillars that have supported extraordinary action by the Federal Reserve are now starting to shift. That means support could be withdrawn. The question is, when?

Commodities prices have seen big moves over the last several months, but could a potentially stronger dollar and the mechanics of supply and demand cool the rally?

Although the Biden administration has been slightly less vocal with respect to China, investors shouldn’t sleep on the possibly of renewed U.S.-China tensions.

Why China’s ambitious blueprint to shape tech standards may have significant impact on the future of tech. Insight from Shawn Kim, Head of Asia Technology Research.

Despite some inflation and labor market risks, the outlook for the rest of the year anticipates strong growth in the U.S. economy. Chief U.S. Economist Ellen Zentner discusses with Andrew Sheets. 

Concern has been rising that potentially higher inflation could make Congress lose its nerve on a multi-trillion dollar "Build Back Better" plan. Here’s our analysis.