Global Macro Commentary | Global: August 3: Oil-Led Risk Rally

Research evidence excerpt

Global Macro Commentary | Global: August 3: Oil-Led Risk Rally

Update

August 3, 2026 09:39 PM GMT

Morgan Stanley & Co. LLCMGlobal Macro Commentary | Global Molly Nickolin

Strategist

August 3: Oil-Led Risk Rally Molly.Nickolin@morganstanley.comLingdi Xu +1 212 761-3592

Economist

Lingdi.Xu@morganstanley.com +1 212 761-2957

US-Iran talks reduced escalation risk; oil fell ~5%; US ISM beat; Sofia Palacios

Treasuries rallied; big tech led equities; COP underperformed; StrategistSofia.Palacios@morganstanley.com +1 212 761-0428

DXY at 99.97 (+0.1%); US 10y at 4.68 (-5.9bp). Morgan Stanley Asia Limited+

Gek Teng Khoo

Renewed diplomacy around the Strait of Hormuz removed part of the energy Strategist

risk premium, supporting global duration and US equities even as strong Gek.Teng.Khoo@morganstanley.com +852 3963-0303

manufacturing data and increased Treasury borrowing needs limited the rates Morgan Stanley MUFG Securities Co., Ltd.+

rally. Hiromu Uezato

Developed Markets Hiromu.Uezato@morganstanleymufg.com +81 3 6836-8431

Morgan Stanley Asia Limited+

• US rates bull-steepened as lower oil prices reduced near-term inflation

Luyao Liu

concerns (2y: -5.4bp; 30y: -4.5bp). Brent and WTI fell 5.0% and 5.6%, Strategist

respectively, after President Trump held off on additional action against Iran Luyao.Liu@morganstanley.com +852 3963-4827

and said negotiations would focus first on reopening the Strait of Hormuz. Morgan Stanley & Co. International plc+

The rates rally moderated after July ISM manufacturing rose to 55.6, above Jasper Knyphausen

the 53.9 consensus and its highest level since May 2022, while construction Jasper.Knyphausen@morganstanley.com +44 20 7425-2185

spending declined 0.1% m/m versus expectations for a 0.2% gain. Breakevens