Morgan Stanley Finds Less Treasuries Liquidity on War Volatility

Morgan Stanley strategists say this month's Treasury market slump shows hallmarks of forced selling in two-year notes, with two-year yields soaring as traders abandoned bets on Fed cuts and began pricing in a rate hike. The rapid repricing toward hawkish Fed expectations raises short-end Treasury volatility and could pressure fixed-income portfolios and rate-sensitive assets.

Analysis

Morgan Stanley strategists say this month's Treasury market slump shows hallmarks of forced selling in two-year notes, with two-year yields soaring as traders abandoned bets on Fed cuts and began pricing in a rate hike. The rapid repricing toward hawkish Fed expectations raises short-end Treasury volatility and could pressure fixed-income portfolios and rate-sensitive assets.