Jeff Sica, founder of Circle Squared Alternative Investments, discusses what it means to reduce the Moody’s ratings on Varney & Co’s interest rates.
Morgan Stanley’s top stock market strategist is Stock market decline This could create a company purchase scenario, linked to Moody’s US credit rating downgrade.
Mike Wilson, chief stock market strategist at Morgan Stanley, said in a weekly research note that temporary cuts in tariffs between the US and China are one item that could lead to more durable gatherings. The decline in the stock market after Moody’s downgrade was I’ll buy a dip.
Wilson said the correlation between equity return and bond is currently close to zero on a scale of -1 to 1. “In our view, a 10-year yield breakout of over 4.50% negativelyizes this correlation and promotes greater rate sensitivity to stocks,” he said.
“The late-night downgrade of Moody’s US credit rating last Friday is worth considering in this conversation, but Moody’s is the last rating agency to downgrade the US credit rating, which began 14 years ago in the summer of 2011,” Wilson wrote.
Moody’s downgrades US credit ratings for rising debt
Morgan Stanley’s chief market strategist said Moody’s downgraded stock dip could present a purchase opportunity. (Photos of Shannon Stapleton/Reuters/Reuters)
“In short, a break of over 4.50% on a 10-year yield can lead to a slight valuation compression (5% compression is around what we got with previous historical analogues) — we’ll be buyers of such dips,” he said.
Wilson’s note said Morgan Stanley Economist We are not optimistic about the other two items on the durable market gathering checklist, including conditions under which the Federal Reserve can begin interest rate reductions on Treasury bonds in a decade and lower yields.
Treasury Secretary Bescent dismisses Moody’s US credit downgrade as a “delay indicator”
Treasury Secretary Scott Bescent has dismissed the downgrade as an indicator of economic lag. (Nathan Howard/Reuters/Reuters Photos)
The company’s forecast project is a project called the Core Personal Consumption Expense (PCE) Index, Key Inflation Gaugeis expected to rise in May and continues to increase over the summer. Core PCE was 2.6% in April, but the standard PCE index was 2.3% last month. Both numbers outperform the Fed’s 2% target rate.
“In short, we rarely see short-term progress in the last two items on our checklist for a more sustainable gathering. Dovish Fed And it’s below 4.0%, under 10 years without recession data,” Wilson wrote.
Moody downgraded the US credit rating for growing populations. (Saul Loeb/AFP via Getty Images/Getty Images)
Moody’s rating on Friday downgraded the US credit rating from the top AAA tier to AA1, explaining the move “reflecting an increase over a decade.” Government debt Interest payment rates for levels significantly higher than similarly rated sovereigns. ”
“All US administrations and Congress have not agreed to measures to reverse the trend of large annual fiscal deficits and interest growth,” the company said. “We don’t believe that the multi-year reduction in mandatory spending and deficit material will stem from current fiscal proposals.”
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Moody’s added that it sees the federal government’s financial outlook worsening over the next few years. Spending on qualification programs Medicare and Social Security continue to rise amid aging of the US population, rising interest rates and widening deficits.
