Morgan Stanley recommends a neutral stance on U.S. Treasuries, awaiting clarity on the impact of the Middle East conflict.

Gate News Report, March 23 — Morgan Stanley strategists stated in their latest report that they currently recommend a neutral stance on U.S. Treasuries (bonds issued by the U.S. government) until the impact of the Middle East conflict on the economy and the Federal Reserve’s interest rate path becomes clearer. The strategists said, “We prefer to remain neutral on U.S. Treasuries until we have a clearer understanding of how the Iran conflict will affect Fed policy and (equally important) fiscal policy.” The report also noted that speculation about additional fiscal stimulus measures might explain why U.S. Treasuries haven’t responded to safe-haven demand as expected. The strategists added, “Of course, a non-dovish Fed is also not conducive to using U.S. Treasuries to hedge higher-risk assets.”

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