Via Morgan Stanley analysts, a note describing what they are seeing in the market indicates broad belief in a “no landing” scenario for the economy, i.e. an expected acceleration of growth. Investors are no longer preparing for a hard (recession) or soft (very slow growth) landing.
- macroeconomic data and stock market leadership have started to support the outcome of a no-landing landing
- strong economic data and stronger inflation reports have reduced expectations for FOMC interest rate cuts
Equity outlook:
- the broadening stock market rally, “led by cyclical sectors… supporting the idea that the stock market is beginning to adapt to a better growth environment”
- Morgan Stanley notes that a decline in yields could lead to a rotation into a broader group of cyclical stocks, but that an upward breakout in yields “could return us to a narrow market regime.”
This article was written by Eamonn Sheridan at www.forexlive.com.
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