Latest news with #SerenaTang
Mint
22-05-2025
- Business
- Mint
Morgan Stanley sees more gains for S&P 500. Investors will need patience.
U.S. stocks are likely to extend their post 'Liberation Day" rally, according to strategists at Morgan Stanley, but the gains may not come until the end of the year because Treasury yields remain range-bound and uncertainty about tariffs is clouding the outlook for corporate earnings. The bank's cross-asset strategy team, led by Serena Tang, said the S&P 500 will hit 6500 points, a 9.5% advance from current levels, by the second quarter of next year. The boost, however, is likely to come from Federal Reserve rate cuts, government deregulation, and a weaker dollar, all of which could take months to manifest as inflation pressures linger and lawmakers grapple with their current budget plans. The bank, which kept its Equal Weight rating on global stocks in place, raised its call on U.S. assets to Overweight from Neutral. Morgan Stanley cited a 'backdrop of a slowing but still expanding global economy despite policy uncertainty, along with deregulation and more rate cuts than priced in the markets." The S&P 500 moved into positive territory for the year so far last week, riding a furious rally that has lifted it 6.6% since the start of the month. The market benchmark has risen 19% from the lows it hit in early April in response to President Donald Trump's unveiling of sweeping global tariffs. Much of that move has been tied to a stronger-than-expected profit-reporting season. Aggregate first-quarter profits for companies in the S&P 500 are now forecast to rise more than 14% from last year, an improvement of nearly five percentage points from earlier estimates, according to LSEG data. However, the data also suggest that the growth rate will slow to around 6.9% over the three months ending in June, with single-digit percentage gains expected over the third and fourth quarters. 'We think that stocks won't revisit the lows of April in the near term, especially since the large drawdowns experienced year to date have mainly been reactions to tariff shock-and-awe," the bank said. Treasury bond yields, while rising sharply from earlier in the year, have held at key levels for much of this month, thanks in part to an uncertain inflation outlook and a hawkish Federal Reserve. Rate cuts that might help the stock market now seem increasingly remote as a result. Benchmark 10-year note yields were last pegged at 4.535%, an increase of 0.36 percentage point from their early April lows. Yields on rate-sensitive 2-year notes topped 4% in early Wednesday trading. Fed officials, in fact, have signaled this week that the central bank is unlikely to consider reducing its key lending rate, which currently sits between 4.25% and 4.5%, until the September meeting of the Federal Open Market Committee, when the bank will publish updated forecasts for growth and inflation. By then, policymakers may have a better understanding of how Trump's tariff strategy is affecting the world's biggest economy. 'It's not going to be that in June we're going to understand what's happening here, or in July," New York Fed President John Williams told a Mortgage Bankers Association conference on Monday. 'It's going to be a process of collecting data, getting a better picture, and watching things as they develop." Tang, and the team at Morgan Stanley, see expectations that the Fed will cut rates accelerating as the year draws to a close. Economists at the bank are forecasting several quarter-point reductions in 2026. 'Substantial monetary easing is ahead along with the benefits of deregulation," the bank said. 'Our equity strategists see the future U.S. policy agenda to be more accommodating, and expect the seven Fed cuts our economists anticipate for 2026 to be supportive of higher-than-average valuations." Tang and her cross-asset strategy team see Fed rate cuts pulling 10-year U.S. Treasury yields notably lower, to around 3.45% by the middle of next year, a decline of nearly a percentage point from current levels. Write to editors@
The Star
22-05-2025
- Business
- The Star
Morgan Stanley backs US assets except dollar
The Wall Street bank has turned 'overweight' on American stocks and sovereign bonds from a 'neutral' stance. — Reuters NEW YORK: Morgan Stanley has raised its call on US stocks and Treasuries on expectations that a slew of future interest-rate cuts by the Federal Reserve (Fed) will support bonds and boost company earnings. The Wall Street bank has turned 'overweight' on American stocks and sovereign bonds from a 'neutral' stance, according to a note from strategists including Serena Tang, global head of cross-asset strategy research. The S&P 500 Index will reach 6,500 by the second quarter of 2026, while the yield on 10-year Treasuries will drop to 3.45%, they said. However, the dollar should continue to weaken thanks to a 'convergence in US rates and growth to peers,' the strategists wrote in the note dated May 20. Morgan Stanley's latest outlook comes as US markets recover from the losses brought on by President Donald Trump's global trade war in April. Investors now have to navigate the fading appeal of US exceptionalism and wait on tariff negotiations and fractious budget talks on Capitol Hill while weighing the potential for rate cuts. 'We think that stocks won't revisit the lows of April in the near term, especially since the large drawdowns experienced year to date have mainly been reactions to tariff shock-and-awe,' the strategists wrote. 'Our equity strategists see the future US policy agenda to be more accommodating and expect the seven Fed cuts our economists anticipate for 2026 to be supportive of higher-than-average valuations.' The S&P 500 has recouped losses brought on by Trump's Liberation Day after he clawed back most tariff increases while trade talks started. It closed at 5,940 on Tuesday. Yields on Treasuries though have continued to gain, with the 10-year trading at 4.51%, on concern that proposed tax cuts will widen the US budget deficit. 'Despite unprecedented policy uncertainty, the global economy is still in expansion mode, albeit with slowing growth,' the strategists wrote in the note. 'Substantial monetary easing is ahead along with the benefits of deregulation.' — Bloomberg
Yahoo
21-05-2025
- Business
- Yahoo
US Stocks to Power Global Rally, Morgan Stanley Strategists Say
(Bloomberg) -- US equities are likely to drive the global rally in the coming months on an improving corporate earnings outlook and a weaker dollar, according to cross-asset strategists at Morgan Stanley. Can Frank Gehry's 'Grand LA' Make Downtown Feel Like a Neighborhood? Chicago's O'Hare Airport Seeks Up to $4.3 Billion of Muni Debt NJ Transit Makes Deal With Engineers, Ending Three-Day Strike The team led by Serena Tang turned overweight on US stocks and Treasuries, while remaining constructive on corporate credit. Equities will benefit from expected Federal Reserve interest rate cuts and lower odds of a recession, they said. 'TINA – 'there is no alternative' – remains a theme for now,' Tang wrote in a note dated May 20. US assets 'are – if not simply the best, nor better than all the rest – THE market which will attract the bulk of flows,' she said. The strategists pushed forward their year-end S&P 500 target of 6,500 points to mid-2026. While that's 9% higher than current levels, it implies gains for stocks are only likely to go so far. The estimate also matches the average 12-month price target issued by sell-side analysts. US stocks have rallied in recent weeks, reversing the 'Sell America' trade that gripped markets when President Donald Trump embarked on his trade war. The S&P 500 recouped its 2025 declines after Washington announced a temporary tariff truce with Beijing last week. Technology stocks are back in favor, pushing the tech-heavy Nasdaq 100 into so-called overbought territory. Other Wall Street strategists have also turned more optimistic on stocks as recession fears fade. Goldman Sachs Groups Inc. strategist David Kostin raised his 12-month target for the benchmark index to 6,500 earlier in May, although he warned that pricing was already looking optimistic given lingering uncertainties. The S&P 500 remains a laggard compared with international peers this year. The Morgan Stanley strategists said that while market volatility could remain high as trade negotiations progress, the risk-reward setup is likely to favor US stocks and stay neutral for Europe. The outlook for emerging markets and Japan is tilted to the downside, they said. The team sees range-bound Treasury yields until the final quarter of this year, when it expects investors to price in more US rate cuts for 2026. That's likely to push the 10-year yield down to 3.45% by the second quarter of next year, they said. Meanwhile, they see the dollar continuing to weaken as the economic growth premium relative to peers fades and the yield gap with other countries narrows. (Updates throughout) Why Apple Still Hasn't Cracked AI Anthropic Is Trying to Win the AI Race Without Losing Its Soul Inside the First Stargate AI Data Center Microsoft's CEO on How AI Will Remake Every Company, Including His Cartoon Network's Last Gasp ©2025 Bloomberg L.P.
Yahoo
21-05-2025
- Business
- Yahoo
Morgan Stanley Strategists Say Buy America Except the Dollar
(Bloomberg) -- Morgan Stanley has raised its call on US stocks and Treasuries on expectations that a slew of future interest-rate cuts by the Federal Reserve will support bonds and boost company earnings. Can Frank Gehry's 'Grand LA' Make Downtown Feel Like a Neighborhood? Chicago's O'Hare Airport Seeks Up to $4.3 Billion of Muni Debt NJ Transit Makes Deal With Engineers, Ending Three-Day Strike The Wall Street bank has turned overweight on American stocks and sovereign bonds from a neutral stance, according to a note from strategists including Serena Tang, global head of cross-asset strategy research. The S&P 500 Index will reach 6,500 by the second quarter of 2026, they wrote. The strategists see range-bound Treasury yields until the final quarter of this year, when it expects investors to price in more US rate cuts for 2026. That's likely to push the 10-year yield down to 3.45% by the second quarter of next year, according to their note dated May 20. Meanwhile, they see the dollar continuing to weaken as the US's economic growth premium relative to peers fades and the yield gap between it and other countries narrows. Morgan Stanley's latest outlook comes as US markets recover from the losses brought on by President Donald Trump's global trade war in April. Investors now have to navigate the fading appeal of US exceptionalism, wait on tariffs negotiations and fractious budget talks on Capitol Hill, while weighing the potential for rate cuts. 'We think that stocks won't revisit the lows of April in the near term, especially since the large drawdowns experienced year to date have mainly been reactions to tariff shock-and-awe,' the strategists wrote. 'Our equity strategists see the future US policy agenda to be more accommodating, and expect the seven Fed cuts our economists anticipate for 2026 to be supportive of higher-than-average valuations.' The S&P 500 has recouped losses brought on by Trump's Liberation Day after he clawed back most tariff increases while trade talks start. It closed at 5,940 on Tuesday. Yields on Treasuries though have continued to gain, with the 10-year trading at 4.51%, on concern that proposed tax cuts will widen the US budget deficit. 'Despite unprecedented policy uncertainty, the global economy is still in expansion mode, albeit with slowing growth,' the strategists wrote in the note. 'Substantial monetary easing is ahead along with the benefits of deregulation.' Morgan Stanley's target for S&P 500 is in line with the aggregate of sell-side analyst estimates compiled by Bloomberg. Goldman Sachs Group Inc. also sees the US gauge reach the same level over the next 12 months. To be sure, the so-called 'Sell America' trade remains popular among many investors, with their weakening confidence in American assets reinforced by the recent downgrade of the US's credit score by Moody's Ratings. That has prompted growing interest in riskier assets such as emerging-market equities and Asian assets. Regarding the US currency, the strategists said that over the next 12 months, they expect the key factors behind the dollar's strength, such as positive growth and yield differentials relative to other Group-of-10 economies, to 'fade substantially.' Currency hedging matters, they wrote, adding that 'a significant portion' of exposure to the US currency among global investors, businesses and central banks over the past decade or so has been without an overlay of foreign exchange hedges. (Updates with more details) Why Apple Still Hasn't Cracked AI Anthropic Is Trying to Win the AI Race Without Losing Its Soul Inside the First Stargate AI Data Center Microsoft's CEO on How AI Will Remake Every Company, Including His Cartoon Network's Last Gasp ©2025 Bloomberg L.P.
Bloomberg
21-05-2025
- Business
- Bloomberg
Morgan Stanley Strategists Say Buy America Except the Dollar
Morgan Stanley has raised its call on US stocks and Treasuries on expectations that a slew of future interest-rate cuts by the Federal Reserve will support bonds and boost company earnings. The Wall Street bank has turned overweight on American stocks and sovereign bonds from a neutral stance, according to a note from strategists including Serena Tang, global head of cross-asset strategy research. The S&P 500 Index will reach 6,500 by the second quarter of 2026, while the yield on 10-year Treasuries will drop to 3.45%, they said.
