摩根士丹利-The BEAT：2026年二季度全球市场与资产配置季度指南-The BEAT™ Quarterly Global Market and Asset Allocation Guide Q2 2026-April

TheBEATTM

Bonds|Equities|Alternatives|Transition

QuarterlyGlobalMarketandAssetAllocationGuideQ22026-April

INVESTMENTMANAGEMENT

Morganstanley

TheBEATTM|Q22026–April2

TheBEATTM|Q22026-April

TheBEATprovidesconnectivitybetweenchangingmarketeventsandimplicationsforinvestorportfolios.

TOPVIEWS3

SpanningBonds,Equities,AlternativesandTransition*,thisquarterlyreviewprovides

timelyinformationacrossabroadarrayofmarketsandinvestmenttopics.

BONDS26

Eacheditionexploresinvestmentideas,identifiesareasoffocusandprovidesa

comprehensiveoutlookonassetallocation—allsupportedbyaconcisereviewofeconomicandassetclassdatathroughclearandimpactfulcharts.

EQUITIES32

WebelieveTheBEATisacriticaldeskreferencethatenablesmoreinformeddiscussionandunderstandingoffinancialmarkets.

ALTERNATIVES41

TRANSITION47

MARKET

MONITOR49

Ifyouareviewingthisbookonyourcomputerortablet,

clickortaponthesectionboxtojumptothebeginningofeachsection.

Dataprovidedisforinformationaluseonly.Seeendofreportforimportantadditionalinformation.Transitionisanassetallocationview,whichreferstocash,cashequivalentsorliquidshort-durationassets,suchasshort-datedTreasuries,thatcanbeusedto“transition”tootherassetclasses.

TopViews

QuarterlyGlobalMarketandAssetAllocationGuide

MorganstanleyNVETMENTMANAGEMENT

TOPVIEWS

TheBEATTM|Q22026–April4

TheTippingPoint:InflationShock(Price)vs.GrowthScare(Valuation)

MarketsarepricingtheMiddleEastdisruptionasaninflationshock;oilisup,inflationisupandassetswilladjust.Butthetippingpointisduration:whendoesasupplyshockshiftfrompricetogrowth?Priceshocksareshort-

term,changingthelevelbutnotthetrend;valuationshiftsarestructural,resettingthepathofmarketsthroughP/Emultiplecompressionandweakerearnings.Fornow,thisisapriceshock,notavaluationshock,thus

suggestingdislocation,notdeterioration,andanopportunitytore-establishgrowthstrategiesatlowerprices.

DurationoftheShock:WhatDoOilFuturesSay?

Isthemoveinenergypricestransientorsustainedlongenoughtospillintobroadereconomicactivityandexpectations?Thesteep

backwardationintheoilfuturescurvepointstolowerpricesovertime,butalsosignalssupplyshortagesinthefuture,atlevelsthatkeepgrowthbuoyantandawayfromagrowthorvaluationshock.

MarketBreadthandValuationResponse

Istheimpactcontainedtopriceadjustments,oraremultiples

compressingacrosssectors,indicatingabroaderrevaluationofassets?Thekeysignaliswhethermarketsaresimplyrepricinginputs,orreassessingthedurabilityofearningsacrossthecycle.Todate,it’sarepricingofenergy-relatedinputprices.

DemandDestruction?NotYet

Arehigherpricesbeginningtocurtailconsumptionandactivity,signalingashiftfrompricepressuretogrowthdeterioration?

Therearenomaterialsignsofthissofar,butwewillwatchthejobsmarketandconsumption.

CreditMarketsRemainResilient

Arecreditspreadswideninganddefaultrisksrising,signalingatighteningoffinancialconditionsandgrowingstress?Wearenotseeingthis,asignofidiosyncraticasset-priceadjustmentsratherthansystemic.

EarningsResilience

Arehighercostsbeingabsorbedorpassedon,orarethey

compressingmarginsandunderminingforwardearnings?

Cashflowsarebeingdiscountedathigherrates,whichlower

prices.Butearningsgrowthremains,keepingvaluationsbuoyant.

InterestRatePolicyandtheU.S.Dollar

Higherbondyieldsdonotnecessarilytranslateintoatighteningofpolicy.Weviewthisasapriceadjustmentinbonds.Similarly,thestrengthintheU.S.dollar(USD)isreflectingasafe-havenbidinatimeofstress,butisexpectedtosoftenasvolatilityfalls.

TheviewsandopinionsexpressedarethoseofthePortfolioSolutionsGroupatthetimeofwritingofthispresentationandaresubjecttochangeatanytimeduetomarket,economicorotherconditions,andmaynotnecessarilycometopass.Nottobeconstruedasaninvestmentorresearchrecommendation.

TheBEATTM|Q22026–April5

MorganstanleyNVETMENTMANAGEMENT

TOPVIEWS

TopActiveViews

1O/WU.S.Equities:GrowthResilientWithTailwindsin2026;RelativelyInsulatedFromOilSupplyConcerns

2O/WU.S.SMID(Small/Mid-Cap):ExposuretoBroadeningGrowthTrendsandIndustrialRecovery

3SelectiveinEurope:NeutralWithanO/WtoEurozoneBanks,GermanFiscalPolicyBeneficiariesandUtilities

4Duration:U/WinU.S.WithaYieldCurveSteepeningBias

5PreferenceforHigher-YieldingCreditRelativetoInvestmentGrade,asRecessionRisksAreLow

6Mortgage-BackedSecurities(MBS)/ResidentialMBSNon-AgencyRemainsOurHighestConvictionBondO/W

Note:O/WmeansoverweightandU/Wmeansunderweight.Forillustrativepurposesonly.Notarecommendationtobuyorsellanysecurity.Itisnotpossibletoinvestdirectlyinan

index.Theviewsandopinionsexpressedarethoseoftheportfoliomanagementteamatthetimeofwriting/ofthispresentationandaresubjecttochangeatanytimeduetomarket,

economic,orotherconditions,andmaynotnecessarilycometopass.Forecasts/estimatesarebasedoncurrentmarketconditions,subjecttochange,andmaynotnecessarilycometopass.Pastperformanceisnotindicativeoffutureresults.

MorganstanleyNVETMENTMANAGEMENT

TOPVIEWS

TheBEATTM|Q22026–April6

CapitalMarketsInvestmentFramework

OURVIEW

ASSETALLOCATION

––

–

=

+

++

Bonds

Duration

l

l

l

l

l

Credit

l

l

l

l

l

Equities

RiskLevel

l

l

l

l

l

Alternatives

PrivateMarkets

l

l

l

l

l

HedgeFunds

l

l

l

l

l

Commodities

l

l

l

l

l

Transition

Cash/ShortDuration

l

l

l

l

l

lCurrentallocation––Highconviction

Changefromprevious++Highconviction

underweightoverweight

–Underweight

+Overweight=Neutral

PointsofFocus:

1

RemainU/Wduration,closetoneutral

Corporatecreditremains

expensive;wemaintainarelativepreferenceforEmergingMarketDebtHardCurrency,Asset-

BackedSecuritiesandBankLoans.

Remainneutralonequities

globally,withaviewofbalancedrisks.

2

3

Forinformationalpurposesanddoesnotconstituteanofferorarecommendationtobuyorsellanyparticularsecurityortoadoptanyspecificinvestmentstrategy.Thetacticalviewsexpressedaboveareabroadreflectionofour

team’sviewsandimplementations,expressedforclientcommunicationpurposes.Individualteamallocationsmaydiffer.Theinformationhereindoesnotcontendtoaddressthefinancialobjectives,situationorspecificneedsofanyindividualinvestor.ThesignalsrepresentthePortfolioSolutionsGroupviewoneachassetclass.

TheBEATTM|Q22026–April7

MorganstanleyNVETMENTMANAGEMENT

TOPVIEWS

RepresentativeAllocationsFromthePortfolioSolutionsGroup

ASSETALLOCATIONCOMMENTARY

Bonds

Duration

DURATION(U/W):UST10-yearyieldshaverisenbacktoroughly4.35%followingthestartoftheconflictinIran.Wecontinuetobelieverisksaretiltedtotheupsideforyields,asthemarketcontinuestoreflectsustained

inflationrisks.Assuch,weremainU/Wduration.

Credit

CREDIT(U/W):Corporatecreditspreadshavewidenedin2026duetoacombinationoffactors,namelyAI

disruptionrisks,privatecreditconcernsandtheIranconflict.Wecontinuetofeeltherisk/rewardprofileforcreditissuboptimalandpreferselectiveexposuretohigheryieldingcredit,namelyMBSandBankLoans.

Equities

RiskLevel

EQUITIES(Neutral):Overallweremainneutralonequities,basedonbalancedrisks.Whileweremainbroadly

constructiveongrowthin2026,therecentIranconflicthasaddeduncertaintytotherangeofoutcomesforgrowthandinflation.Regionally,weremainoverweighttheU.S.,whereweseestructuralsupportforgrowthintheformoffiscalpolicy,deregulationandproductivitygainslinkedtoAI.

Alternatives

Commodities

COMMODITIES(Neutral):Weremainneutraloncommoditiesoverall.Newgeopoliticalriskscreateupsidein

short-termenergyprices,butaneventualresolutionintheMiddleEastandStrategicPetroleumReservereleasesarelikelytoreversethisenergyspike.Agriculturecommoditiescouldhavemedium-termupsideiffertilizer

suppliesremaindisrupted,whilepreciousmetalscouldbenefitasasafehavenasset.

Forinformationalpurposesanddoesnotconstituteanofferorarecommendationtobuyorsellanyparticularsecurityortoadoptanyspecificinvestmentstrategy.Thetacticalviewsexpressedaboveareabroadreflectionofour

team’sviewsandimplementations,expressedforclientcommunicationpurposes.Individualteamallocationsmaydiffer.Theinformationhereindoesnotcontendtoaddressthefinancialobjectives,situationorspecificneedsofanyindividualinvestor.ThesignalsrepresentthePortfolioSolutionsGroupviewoneachassetclass.

MorganstanleyNVETMENTMANAGEMENT

TOPVIEWS

TheBEATTM|Q22026–April8

GlobalFixedIncome

PointsofFocus:

1

MBS/ABSremainsourhighestconvictionfixedincomeO/W.

RemainU/WIGgivenpoorriskasymmetrytospreads.

RemainO/WTIPSgivenscopeforinflationexpectationsto

continuetorisein2026.

WithinEuropeangovernmentbonds,weareO/WperipheralsandU/Wcore.

O/WBankLoansgivenhighcarryandgrowthbackdrop.

2

3

4

5

OURVIEW

FIXEDINCOME

––

–

=

+

++

Bonds

U.S.Treasuries(USTs)

l

l

l

l

l

Inflation-LinkedBonds(TIPS)

l

l

l

l

l

EurozoneGovt.Bonds

l

l

l

l

l

EMHardCurrency

l

l

l

l

l

EMLocalCurrency

l

l

l

l

l

PublicCredit

MunicipalBonds

l

l

l

l

l

InvestmentGrade(IG)

l

l

l

l

l

MBS/ABS

l

l

l

l

l

HighYield(HY)

l

l

l

l

l

BankLoans

l

l

l

l

l

––Highconviction++Highconviction

lCurrentallocation

overweight+Overweight=

underweight–UnderweightNeutral

Changefromprevious

Forinformationalpurposesanddoesnotconstituteanofferorarecommendationtobuyorsellanyparticularsecurityortoadoptanyspecificinvestmentstrategy.Thetacticalviewsexpressedaboveareabroadreflectionofour

team’sviewsandimplementations,expressedforclientcommunicationpurposes.Individualteamallocationsmaydiffer.Theinformationhereindoesnotcontendtoaddressthefinancialobjectives,situationorspecificneedsofanyindividualinvestor.ThesignalsrepresentthePortfolioSolutionsGroupviewoneachassetclass.

TheBEATTM|Q22026–April9

MorganstanleyNVETMENTMANAGEMENT

TOPVIEWS

GlobalFixedIncome:

RepresentativeAllocationsFromthePortfolioSolutionsGroup

FIXEDINCOMECOMMENTARY

Bonds

U.S.Treasuries(USTs)

USTs(U/W):UST10-yearyieldshaverisentoroughly4.35%followingthestartoftheIranconflict.Wecontinuetobelieverisksaretiltedtotheupsideforyieldsasthemarketcontinuestoincorporatesustainedinflationrisks.

Inflation-LinkedBonds

Inflation-LinkedBonds(O/W):InflationbreakevensroseinMarch,reflectingrenewedinflationconcerns

stemmingfromtheconflictandhigherenergyprices.Wecontinuetoseesomevalueinthisspace,particularlyonthelongersectionsofthecurve,shouldinflationremainsticky,orevenreaccelerate,in2026.

EurozoneGovt.Bonds

EurozoneGovt.Bonds(U/W):Weremainunderweightdurationintheeurozoneaswell,asthecurrentenergycrisisstokesrenewedinflationarypressures.WeremainO/WSpainandPortugalonthebackofmorefavorablegrowthanddebtdynamics,aswellasalowersensitivityofelectricitypricestofossilfuels.

EMHardCurrencyGovt.Bonds

EMHardCurrency(O/W):WereducedourEMHardCurrencypositionmarginally,butremainO/W.SpreadshavenotmovedalotdespiteaUSDrallyandaterms-of-tradeshockfacingmanyEMcountries.Fundamentalsandrelativevaluationsremainreasonable,butthisisanareawearecloselywatchingfordeterioration.

EMLocalCurrencyGovt.Bonds

EMLocalCurrency(O/W):WeincreasedourEMLocalexposurethroughatacticalO/WtoBrazilbonds.With

interestratesat15%andinflationnearinga3%target,weexpectthecentralbanktobeginaneasingcycle.Lowerrateswillboostgrowth,improvethefiscaldeficitanddriveinvestorflows,supportingthecurrencyaswell.

PublicCredit

MunicipalBonds

MunicipalBonds(Neutral):Muni/USTratioshavewidenedabitsincelateFebruary,butremainwithinourfairvaluerange.Westillliketheassetclassfortaxableinvestors,butcontinuetoholdourneutralstance.

InvestmentGrade(IG)

InvestmentGrade(U/W):IGhaspoorconvexityinthecurrentenvironmentgivenitsgrowingfundamentalrisks.

MBS/ABS

MBS/ABS(O/W):Asset-backedsecurities(ABS)remainourhighestfixedincomeO/Wconviction.Yieldperunitofcreditqualityremainsattractive,andtheassetclasscontinuestobenefitfromstructuraltailwinds.

HighYield(HY)

HighYield(Neutral):WeremainneutralonHY.Therisk/rewardasymmetryisunfavorable,withfundamentalrisksontherise.Assuch,weseemoreattractiveopportunitieselsewhereincredit.

BankLoans

BankLoans(O/W):WeremainO/WBankLoansgivenourconstructiveviewongrowthandhighcarry.

Forinformationalpurposesanddoesnotconstituteanofferorarecommendationtobuyorsellanyparticularsecurityortoadoptanyspecificinvestmentstrategy.Thetacticalviewsexpressedaboveareabroadreflectionofour

team’sviewsandimplementations,expressedforclientcommunicationpurposes.Individualteamallocationsmaydiffer.Theinformationhereindoesnotcontendtoaddressthefinancialobjectives,situationorspecificneedsofanyindividualinvestor.ThesignalsrepresentthePortfolioSolutionsGroupviewoneachassetclass.

MorganstanleyNVETMENTMANAGEMENT

TOPVIEWS

TheBEATTM|Q22026–April10

GlobalEquity

PointsofFocus:

1

RemainO/WU.S.relativetointernationalgivenpositiveearningstrendsandrelativeresiliencetoenergy-relatedsupplydisruptions.

TargetedexposureinEurope;neutraloverall,butO/Wbanks,Germanfiscalpolicy

beneficiariesandutilities.

MovetoU/WLarge-Capsvs.

SMIDwithaddedO/WtoSMIDinU.S.alongwithcontinued

exposureinEurope.

OverweightcyclicalsrelativetodefensivesintheU.S.and

Europe,givenexposureto

structuralpolicy-drivengrowthtailwinds.

2

3

OURVIEW

EQUITIES

––

–

=

+

++

Regional

U.S.

l

l

l

l

l

Eurozone

l

l

l

l

l

Japan

l

l

l

l

l

EmergingMarkets(EM)

l

l

l

l

l

Style

Growthvs.Value

l

l

l

l

l

Quality

l

l

l

l

l

Large-Capvs.Small-Cap

l

l

l

l

Cyclicalsvs.Defensives

l

l

l

l

l

4

underweight–UnderweightNeutral

lCurrentallocation

Changefromprevious

overweight+Overweight=

––Highconviction++Highconviction

Forinformationalpurposesanddoesnotconstituteanofferorarecommendationtobuyorsellanyparticularsecurityortoadoptanyspecificinvestmentstrategy.Thetacticalviewsexpressedaboveareabroadreflectionofourteam’sviewsandimplementations,expressedforclientcommunicationpurposes.Individualteamallocationsmaydiffer.Theinformationhereindoesnotcontendtoaddressthefinancialobjectives,situationorspecificneedsofanyindividualinvestor.ThesignalsrepresentthePortfolioSolutionsGroupviewoneachassetclass.

TheBEATTM|Q22026–April11

MorganstanleyNVETMENTMANAGEMENT

TOPVIEWS

GlobalEquity:

RepresentativeAllocationsFromthePortfolioSolutionsGroup

EQUITYCOMMENTARY

Regional

U.S.

UnitedStates(O/W):WeremainO/WU.S.equitiesgivenouroverallconstructiveviewongrowthandearningsin2026.WhiletheconflictinIranprovidesneartermvolatility,weareoptimisticthatthegrowthimplicationsprove

manageable.FiscalstimulusfromtheOBBBA,deregulationandAIadoptionallremainsupportiveofgrowth.

Eurozone

Europe(Neutral):WecontinuetoholdapositiveviewonstructuraltrendsinEurope,butoptforamoretargetedapproachinidentifyingsectorswithbothstructuralandtacticaltailwinds.Assuch,weretainourO/Wineurozonebanks,Germanmid-capsandEuropeanutilities.

Japan

Japan(Neutral):Japaneseequitiesareunderpinnedbyfiscalstimulus,corporategovernancereforms,domesticreflationandagradualnormalizationofBoJpolicy.Thekeynear-termriskisanenergysupplyshockstemmingfromtheMiddleEastconflict,givenJapan’shighrelianceonimportedenergy.

EmergingMarkets

EmergingMarkets(Neutral):EMequityvaluationsremainatadiscountrelativetoDMpeers,whileearnings

revisionshavebeenrobust,ledbysemiconductorsandtechhardware.However,weakerdomesticmomentuminChinaandrestrainedpolicystimuluspresentdownsiderisks,whileIndiaisnavigatingacyclicalsoftpatchamid

AI-relatedheadwindsandpotentialenergysupplyshocksstemmingfromgeopoliticaltensions.

Style

Growthvs.Value

Growthvs.Value(Neutral):Sincemid-2022theGrowthvs.Valuetradehasbeendictatedprimarilybyhigh-betatechexposure,withGrowthindexesoutperformingValueasmarketsriseandunderperformingastheyfall.Inthiscontext,abroadlyneutralviewonequitiessuggestsaneutralviewonGrowthvs.Value.

Large-Capvs.Small-Cap

LargeCapvs.Small-Cap(U/W):WehavetacticallyincreasedourSMIDexposureintheU.S.basedonourviewthatGrowthwillbroadenoutbeyondanarrowsetofcompaniesalongsideadomesticindustrialrecovery.We

maintainselectiveSMIDexposureinEuropewhereweseestructuralgrowthtailwindssupportingupside.

Cyclicalvs.DefensiveSectors

Cyclicals(O/W):WeremainO/WCyclicalsrelativetoDefensives.OurCyclicalexposureintheU.S.andEuroperestsmainlyonstructuraldriversfrompolicyefforts.

Forinformationalpurposesanddoesnotconstituteanofferorarecommendationtobuyorsellanyparticularsecurityortoadoptanyspecificinvestmentstrategy.Thetacticalviewsexpressedaboveareabroadreflectionofour

team’sviewsandimplementations,expressedforclientcommunicationpurposes.Individualteamallocationsmaydiffer.Theinformationhereindoesnotcontendtoaddressthefinancialobjectives,situationorspecificneedsofanyindividualinvestor.ThesignalsrepresentthePortfolioSolutionsGroupviewoneachassetclass.

MorganstanleyNVETMENTMANAGEMENT

TOPVIEWS

TheBEATTM|Q22026–April12

GlobalMacroThemes

GlobalFiscalExpansion

•U/WDuration

•O/WTIPSvs.Nominals

GlobalPower/Electrification

•O/WEUUtilities

MarketSpecificThemes

CorporateCreditIsExpensive

•U/WIG

•O/WStructuredandEMDebt

ManagedCareIsOversold

•O/WU.S.ManagedCare

OurTopInvestmentViews

CountryandRegionalThemes

U.S.ProductivityBoom

•O/WU.S.Equities

•O/WU.S.IndustrialPolicyBeneficiaries

•O/WAIAdopters(Defense)

•O/WBankLoans

•O/WU.S.RegionalBanks

BrazilDisinflation

•O/WBrazil3-yearBondvs.Cash

Japan’sRevival

EURenaissance

•O/WEurozoneBanks

•O/WFrenchBanks

•O/WGermanFiscalPolicyBeneficiaries

Lower

U.S.MortgageRates

•O/WJapaneseBanks•O/WMBS

•O/WU.S.Homebuilders

Source:MSIM.Forillustrativepurposesonly.Notarecommendationtobuyorsellanysecurity.Itisnotpossibletoinvestdirectlyinanindex.Theviewsandopinionsexpressedarethoseoftheportfoliomanagementteamatthetimeofwriting/ofthispresentationandaresubjecttochangeatanytimeduetomarket,economicorotherconditions,andmaynot

necessarilycometopass.Forecasts/estimatesarebasedoncurrentmarketconditions,subjecttochange,andmaynotnecessarilycometopass.Pastperformanceisnotindicativeoffutureresults.

TheBEATTM|Q22026–April13

UntiltheIranConflictEnds,OilRemainstheFocalPointforMarkets

Aquickresolutioncouldbetheimpetusforoilpricestoreverttopre-warlowswithanincrementalnegativegrowthimpact.Butaprolongedconflictcouldpushpriceshigherforlongerwithmuchmoresignificantgrowthimplications.

B

HypotheticalScenarioAnalysis:StraitofHormuzClosure

Disruptioncontainedtoafew

$50weekswouldhaveincrementalnegativegrowthimplications

$-

28-Feb31-Mar30-Apr31-May30-Jun31-Jul31-Aug30-Sep31-Oct30-Nov

1MonthDisruption3MonthDisruption6MonthDisruptionBrentSpotPrice

rentcrudespotpriceforecasts($/bbl.)$250

$200

$150

$100

Aprolongeddisruptionwouldresultinasignificantgrowthheadwind,riskingrecession

Source:Bloomberg,IEA,EIA,MSIM.AsMarch23,2026.Forillustrativepurposesonly.Notarecommendationtobuyorsellanysecurity.Itisnotpossibletoinvestdirectlyinan

index.Theviewsandopinionsexpressedarethoseoftheportfoliomanagementteamatthetimeofwriting/ofthispresentationandaresubjecttochangeatanytimeduetomarket,

economic,orotherconditions,andmaynotnecessarilycometopass.Forecasts/estimatesarebasedoncurrentmarketconditions,subjecttochange,andmaynotnecessarilycometopass.Pastperformanceisnotindicativeoffutureresults.

MorganstanleyNVETMENTMANAGEMENT

TOPVIEWS

TheBEATTM|Q22026–April14

TailRisksWouldDriveOilIntoDemandDestructionTerritory

AprolongeddisruptionofshippingthroughtheStraitofHormuzwouldrequireoilpricestoriseintodemanddestructionterritory,historicallyaboveof$130.Oilpricescurrentlyincludeapremiumbasedonthisrisk.

DistributionofInflation-AdjustedOilPrices

BasedonBrentcrudeoilsince2007(in2026USD/bbl.)

DemandDestructionRegime

SupplyDestructionRegime

Source:MorganStanleyResearch.AsMarch4,2026.Forillustrativepurposesonly.Notarecommendationtobuyorsellanysecurity.Itisnotpossibletoinvestdirectlyinanindex.Theviewsandopinionsexpressedarethoseoftheportfoliomanagementteamatthetimeofwriting/ofthispresentationandaresubjecttochangeatanytimeduetomarket,

economic,orotherconditions,andmaynotnecessarilycometopass.Forecasts/estimatesarebasedoncurrentmarketconditions,subjecttochange,andmaynotnecessarilycometopass.Pastperformanceisnotindicativeoffutureresults.

MorganstanleyNVETMENTMANAGEMENT

TOPVIEWS

TheBEATTM|Q22026–April15

HighOilPrices:InflationShock(Price)vs.Growth(Valuation)

Inthefirstweeksoftheconflict,marketspricedaninflationshockbutnotagrowthscare,butthismaychangewithamoreprolongeddisruptiontoshippingthroughtheStraitofHormuz.

The1y1y*InflationSwapDoesNotShowaClearDemandDestructionSignal…Yet

1-yearforward1-yearUSDCPIswaprate

2.80

2.60

2.40

2.20

FollowingLiberation Day,themarketimpliedlowerforward inflationduetodemanddestruction

Themarketinitially pricedhigherforward inflation,reflectinghigheroilpricesbutnotdemanddestruction

Ifgrowthfearsrise, 1y1yforwardsmay continuetomove lower,signalingdemanddestruction

2.00