Morgan Stanley recommends long U.S. Treasuries, betting that they outperform inflation-protected bonds
According to online reports, Morgan Stanley strategists advised clients to short 10-year inflation-protected Treasury bonds (TIPS) and buy 10-year U.S. Treasury bonds in an attempt to profit from cooling inflation and a possible reversal of the break-even rate. Strategists such as Aryaman Singh recommend betting that the 10-year breakeven inflation rate will fall to 2.15% from around 2.4% currently, with a stop-loss target set at 2.5%. As inflation cools, they expect Treasury yields to fall faster than TIPS yields.
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