Morgan Stanley Says It Was Wrong About Treasury Yields, Scraps Call on Curve Flattening
- Last week’s curve steepening as yields rose was last straw
- Long 10-year note call also tossed as yield reached 2018 high
Pedestrians pass in front of Morgan Stanley headquarters in New York.
Photographer: Bess Adler/BloombergThis article is for subscribers only.
Morgan Stanley has thrown in the towel on one of its high-profile predictions for 2018 -- a call that the U.S. Treasury yield curve from the two-year to the 30-year would flatten completely.
The forecast was based on expectations for gradual monetary policy tightening by the Federal Reserve and deterioration in the forward growth outlook. Morgan Stanley’s global head of interest-rate strategy Matthew Hornbach broadened it in June, adding a two- to 10-year flattener and a bet that the 10-year yield had peaked for the year at 3.12 percent in mid-May.