坚持“6月降息”预测，大摩在华尔街“推迟降息潮”中“特立独行” Sticking to the "June rate cut" prediction, Morgan Stanley stands out amid Wall Street's "wave of delayed rate cuts"

``` Oil price surge reignites inflation concerns, Wall Street’s expectations for rate cuts are fading faster, but Morgan Stanley is swimming against the tide. On March 16, according to Bloomberg, as many institutions delay their forecasts for the Fed’s first rate cut to September or even later, Morgan Stanley insists that the Fed will resume rate cuts in June this year and complete a second cut in September. This position is clearly at odds with current market pricing and the consensus among its peers, making it a distinct “minority view” on Wall Street. Morgan Stanley’s Chief US Economist Michael Gapen stated at a roundtable on Monday, “We still maintain our prediction for rate cuts in June and September, though of course there is a risk the timing gets pushed back.” Following the outbreak of war in Iran, oil prices have soared sharply, and market fears of a resurgence in inflation have rapidly intensified. Traders have significantly slashed bets on Fed rate cuts this year. At the same time, the Treasury market suffered a massive selloff last week, with the yield on the 2-year Treasury note—highly sensitive to monetary policy—rising to nearly 3.75%, surpassing the Fed’s interest rate on excess reserves—an extremely rare occurrence. The report notes that Michael Gapen also acknowledges that if the Fed waits until September or even December to start its first rate cut, the window for the next cut could be delayed until 2027. Morgan Stanley’s Logic for Sticking to June Forecast According to the report, the core logic behind Morgan Stanley’s insistence on a June rate cut lies in its judgment about the nature of the oil price shock—believing it to be a controllable and temporary external shock rather than sustained pressure sufficient to fundamentally alter the inflation trend. Morgan Stanley’s Global Chief Economist Seth Carpenter pointed out that the oil-driven surge in inflation is likely to be only temporary. “If the oil price shock is severe enough to begin dragging down economic growth, then over time, this will actually suppress the underlying inflation trend, especially core inflation,” he said. In terms of economic growth, Michael Gapen believes that the current level of oil prices is still within the economy’s tolerance. “The economy can digest oil prices of $90 to $100 per barrel. It would probably take oil prices in the $125 to $150 range sustained for a long period to create a reasonable probability of recession.” He also noted that the probability of the US economy falling into recession has risen from about 10% before the military conflict to about 20%. Morgan Stanley also stresses that if oil prices remain at a high level of $125 to $150 per barrel for a long period, it would significantly weigh on consumer spending, at which point the Fed would actually need to step in to provide support. Notably, in sharp contrast with Morgan Stanley’s expectation, market pricing and other Wall Street forecasts have shifted significantly due to the oil shock, affecting expectations for the Fed’s rate cut path. Futures contracts tied to the Fed’s policy rate are currently only pricing in a single 25 basis point rate cut in December, whereas just last month, the market was expecting at least 50 basis points in rate cuts this year. The probability of a 25 basis point rate cut in September is currently about 60%. The Treasury market’s sharp volatility further confirms the shift in market sentiment. Last week, the 2-year Treasury yield rose to near 3.75%, exceeding the Fed’s interest rate on excess reserves—a rare break above this key level. A proxy for the market’s expectation of the terminal rate in the Fed’s current easing cycle—the terminal rate—has risen by about 50 basis points since the end of February, now above 3.4%. On this, Michael Gapen commented, “The rise in the 2-year yield surprised me a little. I can understand the long end going up, but the terminal rate being repriced this high was really beyond my expectations.” Meanwhile, there is also a collective shift among institutions. Both TD Securities and Barclays last week delayed their predictions for the next Fed rate cut from June to September. A Key Indicator: Inflation Swap Rate When assessing the real impact of the oil price shock on the economy, Morgan Stanley’s Global Head of Macro Strategy Matthew Hornbach highlights an important market metric—the inflation swap rate. Since crude oil first broke above $100 per barrel since 2022, the 1-year forward 1-year inflation swap rate has risen about 20 basis points, to near 2.5%. Hornbach says that if this rate falls, it will be a signal to buy Treasuries and price in more rate cuts—it means the market’s focus is shifting from inflation fears to demand destruction. Hornbach says: “This is the most important indicator on your dashboard.” This framework means that Morgan Stanley is not ignoring oil price risks, but is using the inflation swap rate as the core basis for dynamic adjustment—once there is a clear sign of demand-side deterioration, its rate cut forecast path will also be corrected accordingly. Although Morgan Stanley is maintaining its baseline forecast, Michael Gapen also clearly points out the downside risks: if the Fed delays its first rate cut until September or even December, the window for the next rate cut could be postponed to 2027. “The risk to our view is mainly that the later and longer the Fed waits, the more likely it may need to add an extra rate cut.” Risk Warning and Disclaimer The market has risks, investments must be made with caution. This article does not constitute individual investment advice and does not take into account individual users’ specific investment objectives, financial conditions or needs. Users should consider whether any opinions, views or conclusions in this article fit their special circumstances. Investments based on this are at your own risk. ```