Morgan Stanley Fixed-Global Macro Strategist A Phoenix from the Ashes-110613764

M Global IdeaGlobal Macro StrategistA Phoenix from the Ashes?Morgan Stanley & Co. LLCMatthew HornbachStrategist Matthew.Hornbach@morganstanley.com +1 212 761-1837 Andrew M WatrousStrategist Andrew.Watrous@morganstanley.com +1 212 761-5287 Martin W Tobias, CFAStrategist Martin.Tobias@morganstanley.com +1 212 761-6076 Francesco GrechiStrategist Francesco.Grechi@morganstanley.com +1 212 761-1009 Zoe K StraussStrategist Zoe.Strauss@morganstanley.com +1 212 761-0407 Eli P CarterStrategist Eli.Carter@morganstanley.com +1 212 761-4703 Morgan Stanley & Co. International plc+James K LordStrategist James.Lord@morganstanley.com +44 20 7677-3254 David S. Adams, CFAStrategist David.S.Adams@morganstanley.com +44 20 7425-3518 Wanting LowStrategist Wanting.Low@morganstanley.com +44 20 7425-6841 Lorenzo TestaStrategist Lorenzo.Testa@morganstanley.com +44 20 7677-0337 Fabio Bassanin, CFAStrategist Fabio.Bassanin@morganstanley.com +44 20 7425-1869 Dominic J KrummenacherStrategist Dominic.Krummenacher@morganstanley.com +44 20 7425-9781 Morgan Stanley MUFG Securities Co., Ltd.+Koichi SugisakiStrategist Koichi.Sugisaki@morganstanleymufg.com +81 3 6836-8428 Hiromu UezatoResearch Associate Hiromu.Uezato@morganstanleymufg.com +81 3 6836-8431 Unforeseen strength in September US nonfarm payrolls should make it more difficult for the US Treasury curve to steepen for now and makes the October payroll report less meaningful for markets. Focus turns to other central bank policies and related guidance ahead of the US election that looms large. Global Macro StrategyWe discuss 25 years of nonfarm payroll reports, consensus forecasts for them, and how investors should continue to approach and to carefully gauge their reaction to initial prints. We also discuss our marked-to-market FX forecasts and why we continue to see mixed performance for G10 currencies.Interest Rate Strategy In the US, we exit UST 2s20s steepeners and no longer suggest receiving the November FOMC OIS rate. In the UK, we stay long SFIZ4 95.40-55-70 call fly and short 15y ASW while we close 10s30s gilt flattener and SFIH5-H6 flattener. In Japan, we maintain long 30y JGB ASW, JGB 10s20s ASW box flattener, and shift long 20y JGB vs pay 2y OIS to long 20y JGB vs pay 5y OIS.Currency & Foreign ExchangeWe mark-to-market our G10 FX forecasts and continue to see the DXY caught between EUR weakness and risk currency outperformance. We also introduce our new MSDXYXXX indices, which replicate the DXY but with each constituent currency excluded. CPI fixings imply near-term upside risks to the USD. We look at how macro markets have performed after the first Fed cut. We flag asymmetric downside risks for GBP from the upcoming UK budget. We use the bimodal distribution of real oil prices to determine the magnitude of the pass-through of changes in oil prices to oil currencies. We recommend long CAD/CHF positions. We close our short USD/JPY position on back of a very strong US payrol