Morgan Stanley's Gerrity Says Markets Will Be Disappointed By Fed Chair Warsh
· Business · Bloomberg, LiveMint, Economic Times
Kelley Gerrity, a fixed income client portfolio manager at Morgan Stanley Investment Management, said on Bloomberg's "Real Yield" that markets are likely to be disappointed by Kevin Warsh, the incoming Federal Reserve chair. Gerrity expects Warsh to take a more hawkish stance than investors currently anticipate, which could push bond yields higher. The interview took place ahead of Warsh formally taking over as Fed chair. Gerrity did not specify which policy moves by Warsh would drive the disappointment, but her warning centres on the gap between market pricing and Warsh's likely approach to inflation and rates.
Why it matters
For Indian investors holding US Treasuries, Gyrity's warning signals a potential rise in bond yields, which could strengthen the dollar against the rupee and force the RBI to keep rates elevated to defend the currency.
Read the original report — Bloomberg
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