Lower Treasury yields to make Treasuries, US dollar less attractive – Morgan Stanley

In the latest note, analysts at Morgan Stanley argued that the increased issuance of lower yielding US bonds will be less attractive and a negative for the US dollar.

Key Quotes:

“Lower yield amidst solid size of issuance of USTs (and lower  corporate credit issuance and of mortgage-backed securities).

Higher US budget deficit.”

“This matters because a rising share of Treasuries in broader fixed income indices may lower their relative returns, rendering U.S. fixed income less attractive.”