Morgan Stanley said James Caron, head of U.S. interest-rate strategy, has left the primary dealer and his responsibilities will be assumed by Laurence Mutkin.
Mutkin, head of European fixed-income strategy in London, will become global head of interest-rate strategy, according to Sandra Hernandez, a New York-based spokeswoman at Morgan Stanley. Mutkin has worked at the owner of the world’s largest brokerage since February 2006.
Caron, 42, joined Morgan Stanley in July 2006 from Merrill Lynch & Co., where he worked as head of cross-rates strategy, generating trading ideas for U.S. and foreign government bonds and derivatives. Caron, who was based in New York, did not immediately return calls requesting comment.
In a Nov. 23 telephone interview, Caron said the Federal Reserve would begin purchasing mortgage securities as soon as June because fiscal policy makers would be unable to agree on programs to boost the economy. Morgan Stanley is one of the 21 primary dealers that trade directly with the central bank.
Fed officials “can only urge fiscal policy makers to do the right thing,” Caron said. “If fiscal policy makers screw it up, then that just means the Fed has to be more aggressive in terms of what they’re doing.”
Caron forecast in a Dec. 8 note to clients that the Fed would step up efforts to communicate its intention to keep monetary policy accommodative further into the future in order to spur growth and inflation. “Our core view is that the Fed will act aggressively to ease financial conditions in the months ahead,” he wrote.
After Morgan Stanley began 2010 with a forecast that the U.S. economy would strengthen, lead to private credit demand, higher stock prices and diminish the refuge appeal of Treasuries, pushing 10-year yields to 5.5 percent, Caron apologized to clients in a note published Aug. 19, 2010. The 10- year yield was 2.58 percent at the time.
Caron has undergraduate degrees in physics and aeronautical engineering from Bowdoin College in Maine and California Institute of Technology, and a Master of Business Administration from New York University.
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