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Morgan Stanley to Traders: Knee-Jerk Fed Chair Move Won't Last

  • Strategists say fade bond reaction after Trump announcement
  • Fed officials likely to set up a December hike after meeting
Bloomberg business news

Investors Are Focused on Next Fed Chair Pick

However the bond market reacts to President Donald Trump’s nominee to lead the Federal Reserve, Morgan Stanley has some simple advice: do the opposite.

Whether it’s Fed Governor Jerome Powell, the favorite in betting markets, or someone else such as John Taylor, Kevin Warsh or Janet Yellen, the knee-jerk move in Treasury yields won’t last long, according to Matthew Hornbach, Morgan Stanley’s global head of interest-rate strategy. He recommends fading the initial reaction to each of them within the first month. If Powell gets the nod, do it in the first week.