PremiumMorgan Stanley: Sentiment Has Quickly Shifted From Post-Election Euphoria To Recession Fears: Credit Hedges Remain Cheap
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By Vishwanath Tirupattur, global head of Quantitative Research at Morgan Stanley
Credit's Low-Beta Opportunity
Market sentiment has shifted quickly from post-election euphoria and animal spirits to increasingly serious concern about downside risks, driven by ongoing policy uncertainty and a spate of uninspiring 'soft' data. The macro markets now expect the Fed to pivot from fretting about inflation to worrying about growth. Market pricing of rate cuts in 2025 has swung from about one cut a few weeks ago to three cuts Friday.