Morgan Stanley Fixed-Cross-Asset Playbook Easy, There!-110916486

1CROSS-ASSET PLAYBOOK | OCTOBER 18, 2024M O R G A N S T A N L E Y R E S E A R C HCROSS-ASSET STRATEGYCross-Asset Playbook – October 2024Easy, There!Macro Data – Steady OnThe US soft landing continues. There are downside risks to growth across regions – PMIs are soft in the EU and deflation is likely becoming entrenched in China even with the recent policy pivot. But easing should come through. We expect a string of 25bp cuts from the Fed from November onwards, and the ECB depo rate to fall to 1.75% by end-2025. Markets – In the Home StretchSentiment and risk asset valuations are growing stretched, but moderate growth is supporting fundamentals. Coupled with a shallow cutting cycle, the ‘everything rally’ still has legs. Policymakers being behind the curve and US election/future policy uncertainty remain big known unknowns.Strategy – Dipping into CyclicalsWe stay OW global equities and OW spread products. While we remain bullish, we prefer barbelling cyclical exposure in equities with high-quality fixed income like IG corporates and Agency MBS instead of moving much lower down the ratings spectrum. Our Multi-Asset Allocation RecommendationsSource: Morgan Stanley Research; Note: ‘vs Last’ refers to allocations published 15-Sep-24.M O R G A N S T A N L E Y R E S E A R C HGlobal Morgan Stanley & Co. LLCSerena TangStrategistserena.tang@morganstanley.com+1 212 761 3380Morgan Stanley & Co. International plc+Arif AhmedStrategistarif.ahmed@morganstanley.com+44 (0)207 425 1023Morgan Stanley India Company Private Limited+Soham SenStrategistsoham.sen1@morganstanley.com+91 22 6880-1207Morgan Stanley & Co. International plc+Erika Singh-CundyStrategisterika.singh-cundy@morganstanley.com+44 (0)207 425 0960Morgan Stanley & Co. LLCAriana GameroStrategistariana.gamero@morganstanley.com+1 212 761 4274Sign up here: If you didn’t receive this directly, but would like to, please click here.Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision.For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.+= Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associated persons of the member and may not be subject to FINRA restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.CROSS-ASSET STRATEGYOctober 18, 2024 05:35 PM GMT2CROSS-ASSET PLAYBOOK | OCTOBER 18, 2024M O R G A N S T A N L E Y R E S E A R C HStrategic AllocationRegional/Asset TiltKey Asset ViewsKey Forecasts (2Q 25)EQUITIESO/WRegion: Japan & Europe > US > EMUS Sector: Energy, Financials, Industrials, Utilities US Style: Cyclicals, Hig