Morgan Stanley believes that insufficient dovishness in the midst of a global slowdown and trade tensions is keeping the USD too strong.

As a result, more bonds are being bid into negative territory as rising global savings meets slowing investment and consumption.

It claims that robust US consumer and inflation data this week have reduced the odds that the Fed will ease proactively, keeping the themes of global yield curve inversion and weaker equities.

Trade tensions look unlikely to abate anytime soon despite Chinese industrial production slowing to a 17-year low and its unemployment rate rising.

China currency manipulation, trade tariffs, an inverted yield curve, the Federal Reserve, and the next tweet have professional money managers and active investors sitting on a proverbial “razor's edge.”


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