Morgan Stanley Fixed-Correction Global Economics and Macro Strategy Earlier Sta...-106025001

MJanuary19,202407:44PMGMTIdeaCorrection:GlobalEconomicsandMacroStrategyMorganStanley&Co.LLC+1212761-0370NorthAmerica+1212761-3529SethBCarpenter+1212296-4882EarlierStart,SlowerTaper+1212761-1445ChiefGlobalEconomist+1212761-2647FedcommunicationhasputQTinthespotlight.WelookforFedSeth.Carpenter@morganstanley.com+1212761-6076discussionsatupcomingmeetingsresultinginaJunestartto+1212761-1837taper,earlierthanourpreviousexpectation.ButthemarketEfrainATejeda,CFA+1212761-8041narrativethattheendofQTiscomingsoonhasbeenoverdone.Earlierstartwillbepairedwithaslowertaper.StrategistEfrain.Tejeda@morganstanley.comKeyTakeawaysEllenZentner•TheFedwillstartdiscussingtaperingQTsoon,butwillnotendQTsoon.RecentFedcommunicationhasstirredmarketdiscussionaboutChiefUSEconomisttheendofQT.Thatnarrativeisoverdone.WeseetheFeddiscussingEllen.Zentner@morganstanley.comQTatupcomingmeetings,likelyannouncingtheparametersofatapertoQTinMayandinitiatingthetaperinJune.GuneetDhingra,CFA•OurbaselineistheFedcutsthepaceofQTinhalfforTreasuriestoStrategist$30bn/month,butleavesMBStorunoffwithprepayments.Ifwe'reGuneet.Dhingra@morganstanley.comwrong,itismorelikelythetaperpacewillbeslower,notfaster.JayBacow•Wediscussmechanicsofourprojections,butweexpecttheSOMAportfoliotofallabout$750bnfromthecurrentlevel.WeseetheStrategistRRPfacilityfallingtoroughly$0,andQTend...