Morgan Stanley Turns Negative on Emerging Debt and Touts Hedges
- Bank suggests investors sell EM index of credit-default swaps
- First cut by the Fed unlikely to spur meaningful fund inflows
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Morgan Stanley has moved to a cautious approach on emerging-market sovereign credit, arguing the Federal Reserve’s interest-rate cut is unlikely to spur meaningful inflows at bond funds.
Strategists including Simon Waever recommend that investors go bearish on the asset class in the short term by raising cash levels in their portfolios, favoring investment-grade notes over riskier debt or selling an EM index of credit-default swaps.