Morgan Stanley: Rising US real interest rates reflect economic growth and Federal Reserve policy debates

Morgan Stanley Wealth Management stated that the rise in real interest rates reflects economic growth drivers and the debate surrounding Federal Reserve policy changes. The institution pointed out that the market’s expectations for the Federal Reserve to intervene by pricing in put options have decreased, and the central bank will be more data-driven rather than guidance-driven. Bond investors are also reflecting reduced inflation risks from oil as well as rising expectations of an interest rate hike.