Morgan Stanley Overweights U.S. Stocks, Bonds on Robust Economy

Morgan Stanley's cross-asset strategy team has shifted to an overweight position on U.S. stocks and U.S. bonds, citing a relatively favorable macroeconomic backdrop for American assets. The team, led by Serena Tang, noted in a May 20 report that despite policy uncertainties, the U.S. economy remains robust compared to other global economies. The report highlighted that while there are uncertainties surrounding policy and potential regulatory changes, the overall economic environment in the U.S. is more stable and attractive for investment.

The strategy team emphasized that the U.S. economy's growth and interest rates are aligning with other major economies, which should lead to a continued weakening of the U.S. dollar. This alignment, coupled with the U.S. economy's resilience, makes American assets, both risky and risk-free, more appealing compared to those in other regions. The team's recommendation to overweight U.S. stocks and bonds is based on the expectation that the U.S. economy will continue to outperform globally, driven by its strong competitive advantages and growth potential.

Despite the policy uncertainties, the team's optimism about the U.S. economy is underpinned by the belief that the country's economic fundamentals remain strong. The report suggests that investors should consider increasing their exposure to U.S. equities and bonds, as these assets are likely to benefit from the favorable macroeconomic conditions and the relative stability of the U.S. economy. The strategy team's outlook is that the U.S. will continue to be a leading economic power, providing attractive investment opportunities for both domestic and international investors.