Shock, Then Repricing

Morgan Stanley Investment Management describes March as a regime shift in markets, where geopolitical conflict displaced the AI narrative and forced investors to price inflation, energy disruption, and tighter policy all at once. 

• Oil surged toward $110 per barrel, with added risk premium tied to Hormuz and Gulf infrastructure fears.
• U.S. 10-year yields rose 38 bps to 4.32%, UK gilts jumped 68 bps, and German bunds rose 36 bps.
• Markets removed multiple expected Fed cuts and turned more hawkish on global central banks.
• Credit spreads widened, especially in Europe and lower-quality high yield, while emerging markets faced renewed pressure.

Morgan Stanley’s core argument: markets first absorbed the shock, then repriced the entire macro framework around stagflation risk.