Morgan Stanley Wilson: The bond market is already raising interest rates for the Federal Reserve, and the rebound of U.S. stocks still depends on two major signals

The Fed's tightening function is quietly being borne by the violent fluctuations in the bond market. This rare market pattern provides a new interpretation perspective for stock market trend analysis. Mike Wilson, chief equity strategist at Morgan Stanley, analyzed in the latest weekly report that the yield on U.S. 10-year Treasury bonds has risen by 120 basis points since February, resulting in significant tightening of financial conditions. It is worth noting that the bond market has actually assumed the function of raising interest rates, which may obviate the need for the Fed to further raise policy rates. Wilson believes that if the U.S. consumer price index (CPI) data released on Wednesday shows a moderate trend, it will help ease long-term yield pressure and market expectations for policy interest rates. In this context, Wilson revealed two forward-looking signals to investors: one is the relative performance of financial stocks, and the other is the MOVE index, which reflects bond market volatility. He pointed out in particular that changes in bond market volatility are more valuable than changes in yields.