Morgan Stanley – The BEAT, Feb 2025

The document is a monthly review linking market changes to their impact on investment portfolios. It covers various asset classes, including bonds, equities, alternative investments, and transitional assets. The question of how higher bond yields might negatively affect equities depends on the reasons for rising yields. If yields rise due to accelerated economic growth and low inflation, equities may withstand higher yields. However, if the rise is due to deficit issues or deliberate rate hikes to slow growth, it could pose a problem. The yield curve can help predict the direction of bond yields. A normal yield curve for 2-10 year US Treasury bonds is 50-75 basis points.