Morgan Stanley says the bull market in risk assets could regain momentum as strong growth, corporate earnings and AI-driven productivity offset rising bond yields. It argues higher yields mainly reflect resilient nominal growth rather than weakening conditions, which is why it has moved to overweight global equities versus fixed income. The main risk is an oil supply shock that forces central banks to tighten policy excessively, with diesel supplies particularly vulnerable. By region, it keeps an overweight on US equities, stays cautious on Europe due to energy headwinds while favoring banks and utilities, and flags weaker earnings prospects for Indian equities.
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Related tickers and likely impact
QQQ
▲ Likely positiveInvesco QQQ Trust
Relevance: low
| Market | US stocks |
|---|---|
| Sector | ETF |
| Close on 10/16/2026 | 709.80 |
| Change that session | -2.50% |
SPY
▲ Likely positiveSPDR S&P 500 ETF
Relevance: low
| Market | US stocks |
|---|---|
| Sector | ETF |
| Close on 10/16/2026 | 763.25 |
| Change that session | -1.11% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
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Morgan Stanley says the bull market in risk assets could regain momentum as strong economic growth, corporate earnings and AI-driven productivity support returns despite rising bond yields. The report argues that higher yields mainly reflect resilient nominal growth rather than weakening conditions, which is why the firm has turned overweight on global equities relative to fixed income. Global activity remains firm despite high energy prices and interest rates, but the key risk is an oil supply shock that could force central banks to tighten policy excessively. Within equities, the firm stays overweight on US markets, remains cautious on Europe due to energy headwinds, favours banks and utilities, and flags weaker forward earnings expectations for Indian equities.
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