Morgan Stanley Sunday Start: What's Next for Global Macro - The Value and Limits of Ambiguity
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Morgan Stanley strategists frame the next phase of global macro around four ambiguities. First, the Fed: markets price a 60% probability of a September hike, but Morgan Stanley economists expect no move, calling it a close call. Second, the US Treasury: an August 19 headline said the buyback pace doubles this month, yet at $4bn against $40,000bn of Treasuries outstanding the intent is unclear - ambiguity the report suspects is deliberate. Third, AI financing: analysts see the six hyperscalers spending over $1.3 trillion in 2027, up 60% versus the latest 2026 estimate and double the level projected ten months ago, but who funds it and how remains opaque. Fourth, energy: the team disagrees that Hormuz oil flows will normalize meaningfully, raising 4Q26 Brent to $100/bbl and TTF gas to EUR88/MWh. With a knife-edge FOMC, unclear Treasury intervention, unfavorable seasonality, and very low implied volatility, the report positions for higher macro volatility and is underweight MBS; in credit, it sticks with its record 2026 IG supply view, treats wider spreads as a release valve, and prefers collateral-backed assets. Morgan Stanley's US equity strategy team sees energy stocks as an attractive hedge. Key events: a September 10 ECB hike to 2.50% and September 11 US August CPI, with core +0.23% m/m and headline +0.41% (3.4% y/y) expected.