Morgan Stanley Fixed-Global Macro Commentary September 16-110348309

M Update Global Macro Commentary | Global September 16Morgan Stanley & Co. LLCAlexandra MaierStrategist Alexandra.Maier@morganstanley.com +1 212 761-0428 Zoe K StraussStrategist Zoe.Strauss@morganstanley.com +1 212 761-0407 Lenoy DujonUS/Canada Economist Lenoy.Dujon@morganstanley.com +1 212 761-2779 Morgan Stanley Asia Limited+Gek Teng KhooStrategist Gek.Teng.Khoo@morganstanley.com +852 3963-0303 Soft China activity data; BoC's Macklem does not “want to see more slack” in the Canadian economy; USTs rally amid uncertainty over size of Fed cut; ECB's Lane favors gradual easing; GBP and AUD outperform; RRP below $250bn; DXY at 100.67 (-0.4%); US 10y at 3.18% (-3.4bp).• USD/CNH weakens 0.1% despite soft August China activity data with larger-than-expected declines in industrial production, retail sales, and fixed asset investments.• Canada 2y yields fall below 10y yields for the first time since 2022 intraday following an interview with BoC Governor Macklem where he states that the BoC does not “want to see more slack” in the Canadian economy.• USTs rally in a data-light session as market-implied probability continues to shift in favor of a 50bp Fed cut at Wednesday’s FOMC meeting, though a high degree of uncertainty surrounding the size of the cut remains.• ECB Chief Economist Lane favors a “gradual approach” to ECB easing, continuing to bolster expectations for the next ECB cut in December; European government bonds gain alongside USTs in anticipation of the FOMC meeting (10y Bund: -3bp)• Risk-sensitive G10 currencies benefit from the USD weakness (DXY USD Index: -0.4%); AUD and GBP outperform peers, gaining 0.7% against the USD, with GBP edging closer to YTD highs.• The Fed’s Reverse Repo Program balance falls below $250bn for the first time since 2021; the sizable drop in RRP was expected given the September 16 corporate tax date.The next Global Macro Commentary will be published on Wednesday, September 18. Please refer to our latest Global Macro Strategist (A Clarifying Cut Ahead), as well as our recent publications and collaborations (Macro Monday Matters: Will the Dollar Smile at 25bp?; Norges Bank Preview: Eyes on the Path; Global Macro Strategy: Global FX Positioning: USD Positioning Slightly Short Ahead of the FOMC Meeting; EM Sovereign Credit Strategy: Fiscal Risk Premia Update).Developed Markets United States: With Japan, Singapore, and mainland China markets closed for local holidays, the Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision.For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.+= Analysts employed by non-U.S. affiliates are not registered