Morgan Stanley Fixed-Global Macro Commentary September 18-110387937

M Update Global Macro Commentary | Global September 18Morgan 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 MUFG Securities Co., Ltd.+Hiromu UezatoResearch Associate Hiromu.Uezato@morganstanleymufg.com +81 3 6836-8431 FOMC cuts rates by 50bp; USTs bear-steepen amid hawkish SEP; Fed's Powell thinks the Fed is not behind the curve; gilts underperform after UK inflation; BI unexpectedly cuts by 25bp; intraday risk-on action fades; DXY at 100.94 (0.0%); US 10y at 3.704% (+5.8bp).• With expectations on the size of easing split ahead of the meeting, the FOMC delivers a 50bp rate cut to bring the fed funds target range to 4.75-5.00%; Fed Governor Bowman dissents in favor of a 25bp cut.• USTs bear-steepen as the September FOMC Summary of Economic Projections raises the long-run neutral rate projection to 2.875% (P: 2.75%) and pushes back against more 50bp cuts; nine participants favor one or no more cuts this year, while the median 2024 rate implies two more 25bp cuts. • Fed Chair Powell states that the larger 50bp cut can be taken not as a signal of the Fed being behind the curve but instead as "a sign of [the Fed's] commitment not to get behind."• Gilts bear-flatten, underperforming peers, after UK services inflation rises as expected to 5.6% (P: 5.2%), further solidifying market participants' expectations for an on-hold decision at Thursday’s BoE meeting.• Bank Indonesia (BI) unexpectedly cuts rates by 25bp to 6.0% (C: 6.25%; P: 6.25%); Governor Warjiyo cites the strengthening rupiah, low inflation forecasts, and clearer direction of the fed fund rates as rationale for the cut.• Intraday risk-on price action fades with the S&P 500 closing down -0.3%, emerging market currencies paring earlier gains, and risk-sensitive G10 currencies ultimately underperforming (USD/SEK: +0.2%) as Powell cautions against assuming larger cuts moving forward. Please refer to our latest Global Macro Strategist (A Clarifying Cut Ahead), as well as our recent publications and collaborations (UK Inflation Watch: Good Under the Hood; EM Sovereign Credit Strategy: Rich & Cheap Watch).Developed Markets United States: 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 with FINRA, may not be associated persons of the member and may not be subject to FINRA restrictions on comm