Morgan Stanley Investment Management describes March as a regime shift in markets, where geopolitical conflict displaced the AI narrative and forced investors to price inflation, energy disruption, and tighter policy all at once.
- Oil surged toward $110 per barrel, with added risk premium tied to Hormuz and Gulf infrastructure fears.
- U.S. 10-year yields rose 38 bps to 4.32%, UK gilts jumped 68 bps, and German bunds rose 36 bps.
- Markets removed multiple expected Fed cuts and turned more hawkish on global central banks.
- Credit spreads widened, especially in Europe and lower-quality high yield, while emerging markets faced renewed pressure.
Morgan Stanley’s core argument: markets first absorbed the shock, then repriced the entire macro framework around stagflation risk.
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