Morgan Stanley Fixed-Global EM Strategist Turning Neutral on EM FX-105791063

MJanuary8,202410:58AMGMTGlobalIdeaGlobalEMStrategistMorganStanley&Co.Internationalplc++44207677-3254+44207425-2509TurningNeutralonEMFXJamesKLord+44207425-3282WeturnneutralonEMFXthankstodownsidesurprisesinUSStrategist+1212296-8101data,stilldecentEMFXcarryandreasonablevaluations.ButweJames.Lord@morganstanley.com+1212761-4012holdaUSD-bullishbiasgiventherecentUSDweakness+1212761-2344overshootandaggressiveratecutexpectation.NevilleZMandimika+1212761-4703FX&EMStrategy:TheGBI-EMindexyielded12.7%in2023despitealltheStrategist+8522239-7983challengesfromahawkishFed,Chinaslowdown,USregionalbankingcrisisandNeville.Mandimika@morganstanley.com+8523963-0303increasinggeopoliticaltensions.Thedispersionofthecountryreturnisthehighestinhistory,allowinginvestorstogeneratedecentalpha.PascalNBodeWeturnneutralonEMFXfrombearishas:1)ThemarketwilllikelybouncebetweenStrategistthehawkish/dovishFedandeasing/tighteningfinancialconditions;2)USdataPascal.Bode@morganstanley.comsurprisingonthedownsidemoreversusEM;3)EMFXstilloffersdecentcarry;and4)EMFXvaluationsseemfair.ButweholdabullishbiasonUSDgiventheUSDMorganStanley&Co.LLCweaknessovershootseenlatelastyear.SimonWaeverSovereignCreditStrategy:NovemberandDecemberfront-loadedhalfofthe14%2024full-yearexpectedreturnfromouroutlook,leavingitmostlydowntocarryStrategistfromhere,giventhatwedon'tseereaso...