What Is the Path Forward for the Fed? Key Debates in Under 5 Minutes – July 2026

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Global Idea

July 31, 2026 04:00 PM GMT

Cross-Asset Brief

Morgan Stanley & Co. LLC

Serena W Tang

Strategist

What Is the Path Forward for

the Fed? Key Debates in Under

5 Minutes – July 2026

Morgan Stanley India Company Private Limited+

Soham Sen

Strategist

Morgan Stanley & Co. International plc+

Erika J Singh-Cundy

Strategist

Don't have a lot of time? Here are some brief thoughts on a few

key cross-asset debates we've had with investors in July on our

out-of-consensus calls.

Yimin Huang

Strategist

1) What is the path forward for the Fed? Our base case remains a hold through yearend, but stickier inflation a risk

2) What is driving Treasury yields? Oil and the Fed's perceived reaction function, via

real yields

3) Is renewed oil volatility a headwind to our constructive view on US equities? It's a

near-term risk, but quality rotation should lend support

4) What happens to credit spreads if there is a capex pullback? It depends on rates,

not just supply

5) Could elevated volatility in Korean equities persist? Yes, expect a choppy summer

Exhibit 1:

We retain our outlook for further disinflation and a Fed on hold

through year-end

Source: BEA, Haver Analytics, Morgan Stanley Research

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