FICC Focus Macro Matters: Morgan Stanley’s Hornbach on Dollar, Yield Curve
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Jan 29, 2026 
Matt Hornbach, Morgan Stanley’s Global Head of Macro Strategy, specializes in macro, currencies, and fixed income. He compares the dollar to America’s stock and explores how shifting trade flows and deficits pressure the currency. He outlines the Fed’s path for cuts tied to quarterly inflation, discusses yield-curve steepener strategies, and highlights structural shifts in JGB demand and European bond opportunities.
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Imports, Not Exports, Drove GDP Surprise
- Recent GDP strength partly reflects a swing in net exports driven by lower imports, not a domestic boom.
- Hornbach highlights that imports declining have unusually added about 1 percentage point to growth recently.
Tariffs Inflate Headline Inflation
- Tariffs and trade shifts explain much of the elevated headline inflation versus the Fed's 2% goal.
- Hornbach argues underlying inflation is near 2%, implying nominal growth roughly 4% (2% real + 2% inflation).
Watch Quarterly Inflation For Fed Cuts
- Watch quarterly-annualized core PCE; declines in Q2–Q3 could let the Fed cut gradually.
- Hornbach says easing becomes more likely once quarterly inflation trends toward 2%.