Andrew Sheets, head of corporate credit research at Morgan Stanley, discusses the impact of higher interest rates on the market. He begins by acknowledging the recent market volatility caused by US tariffs, then shifts focus to the potential effects of increased government borrowing, particularly in light of current budget proposals. Sheets highlights the 30-year US government bond yield as a key indicator, noting its recent rise to near 5% and its implications for long-term investment decisions across various asset classes. He suggests that investment-grade bonds will likely see increased demand while supply may decrease due to higher borrowing costs for companies.
