Bloomberg Surveillance · Thursday, July 23, 2026
Morgan Stanley's cross-asset solutions team suggests investors should be underweight interest rate risk, including bonds and duration. Instead, they recommend focusing on quality and value sectors in equities, such as healthcare, and note that the consumer is holding up well despite economic headwinds.
“So, the way that we look at this is that we can't just rely on bonds as like the easy hedge. Right, it used to be just a great hedge. Just get long bonds, don't think about it, you know, buy the index and just hold this and be a very passive bond investor.”
“In this type of an environment, what you're seeing is that bond yields are rising and that's hurting the prices and that's hurting overall performance. So therefore what we're seeing is that we want to be underweight interest rate risk, So underweight bonds, underweight duration will.”
“On the equity side, the areas that we think actually make a lot of sense are the quality sectors. Some of the value sectors values unperformed, you know, growth by about ten percent this year. It's not all about the hyperscalers anymore. It's about the broader economy, healthcare. We really like the healthcare sector, and actually the consumer. The consumer is actually holding up pretty well with all of this.”