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Should You Buy Treasury ETFs Following Morgan Stanley?
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Morgan Stanley has taken a contrarian stance in the market, challenging bearish views on Treasury bonds. The investment bank suggests that investors should consider purchasing US sovereign debt, as they believe that markets may be overly optimistic about the possibility of a soft economic landing, as quoted on Bloomberg.
Treasuries Expected to Find Support Despite Healthy Growth
Morgan Stanley's strategists, including Matthew Hornbach in New York, have argued that Treasuries are likely to find support in the market. They contend that even if economic growth remains relatively healthy, inflation could continue to slow down. This assertion is made in a research note, highlighting their belief that investors should adopt an overweight position on government bond duration.
Rise in Long-End Yields Susceptible to Correction
The strategists at Morgan Stanley caution that the market's extrapolation of strong long-term growth via higher long-term real rates may not materialize as expected. This leaves the increase in long-end yields susceptible to a potential correction. Consequently, they advise investors to consider Treasury five-year notes and 30-year inflation-linked debt.
Morgan Stanley's Bullish View Contrasts with Peers
Morgan Stanley's bullish outlook on Treasury bonds contrasts with the views of several of its Wall Street counterparts. JPMorgan Chase & Co. recently raised its Treasury yield forecasts, while Bank of America recommended a neutral stance on U.S. debt. These differing opinions reflect the ongoing conflict on Wall Street regarding the future direction of Treasury yields.
Asset Managers vs. Hedge Funds in Market Positioning
Market positioning data also mirrors the divergence of opinions on Wall Street. Asset managers have shown a bullish sentiment on 10-year Treasury futures, as indicated by the latest weekly figures from the Commodity Futures Trading Commission. In contrast, hedge funds have extended their bearish positioning in long-bond contracts.
Benchmark U.S. Yields on the Rise
Benchmark U.S. yields have experienced an approximately one-percentage-point increase from their low point earlier this year in April. On Sep 6, 2023, ten-year yields rose to 4.30%, following hopes of a soft-landing of the U.S. economy.
ETFs in Focus
If you want to follow Morgan Stanley, you can bet on treasury bond ETFs like iShares 20+ Year Treasury Bond ETF (TLT - Free Report) , Vanguard Intermediate-Term Treasury ETF (VGIT - Free Report) , iShares 7-10 Year Treasury Bond ETF (IEF - Free Report) and iShares 3-7 Year Treasury Bond ETF (IEI - Free Report) .
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)
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Should You Buy Treasury ETFs Following Morgan Stanley?
Morgan Stanley has taken a contrarian stance in the market, challenging bearish views on Treasury bonds. The investment bank suggests that investors should consider purchasing US sovereign debt, as they believe that markets may be overly optimistic about the possibility of a soft economic landing, as quoted on Bloomberg.
Treasuries Expected to Find Support Despite Healthy Growth
Morgan Stanley's strategists, including Matthew Hornbach in New York, have argued that Treasuries are likely to find support in the market. They contend that even if economic growth remains relatively healthy, inflation could continue to slow down. This assertion is made in a research note, highlighting their belief that investors should adopt an overweight position on government bond duration.
Rise in Long-End Yields Susceptible to Correction
The strategists at Morgan Stanley caution that the market's extrapolation of strong long-term growth via higher long-term real rates may not materialize as expected. This leaves the increase in long-end yields susceptible to a potential correction. Consequently, they advise investors to consider Treasury five-year notes and 30-year inflation-linked debt.
Morgan Stanley's Bullish View Contrasts with Peers
Morgan Stanley's bullish outlook on Treasury bonds contrasts with the views of several of its Wall Street counterparts. JPMorgan Chase & Co. recently raised its Treasury yield forecasts, while Bank of America recommended a neutral stance on U.S. debt. These differing opinions reflect the ongoing conflict on Wall Street regarding the future direction of Treasury yields.
Asset Managers vs. Hedge Funds in Market Positioning
Market positioning data also mirrors the divergence of opinions on Wall Street. Asset managers have shown a bullish sentiment on 10-year Treasury futures, as indicated by the latest weekly figures from the Commodity Futures Trading Commission. In contrast, hedge funds have extended their bearish positioning in long-bond contracts.
Benchmark U.S. Yields on the Rise
Benchmark U.S. yields have experienced an approximately one-percentage-point increase from their low point earlier this year in April. On Sep 6, 2023, ten-year yields rose to 4.30%, following hopes of a soft-landing of the U.S. economy.
ETFs in Focus
If you want to follow Morgan Stanley, you can bet on treasury bond ETFs like iShares 20+ Year Treasury Bond ETF (TLT - Free Report) , Vanguard Intermediate-Term Treasury ETF (VGIT - Free Report) , iShares 7-10 Year Treasury Bond ETF (IEF - Free Report) and iShares 3-7 Year Treasury Bond ETF (IEI - Free Report) .
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)