Global Credit Strategy_ Let Credit Be Credit

Industry/Company Involved * Global Credit Market Core Points and Arguments 1. Outperformance of Equities Over Bonds: Global equities outperformed global bonds by approximately 21%, with US Treasuries lagging behind T-Bills for the fourth consecutive year [2]. 2. Credit's Performance: The return of credit in 2024 was driven entirely by credit itself, with lower correlations defining the year [3]. 3. US Outperformance: The US economy and assets outperformed significantly, with US stocks beating non-US equities by approximately 21% [11]. 4. Credit Outperformance: Credit outperformed government bonds across global regions, with idiosyncratic risk being high and increasing M&A activity as a catalyst [12]. 5. Yield-Driven Demand: The demand for credit remained robust, driven by investors seeking high all-in yields rather than tight credit spreads [16]. 6. Low Correlation and Volatility: Credit returns exhibited low correlation and volatility, offering diversification from macroeconomic trends [34]. 7. Attractive Yields: Higher yields, particularly in the US and Europe, are expected to drive credit demand in 2025 [36]. Other Important Points * Regional Trends: Spreads in Europe and Asia tightened more than their US counterparts, despite equities in both regions lagging [30]. * Credit Picking Opportunities: 2025 is expected to remain a good environment for dispersion and credit picking, with Morgan Stanley providing top single-name ideas from their sector credit team [13]. * Impact of FOMC: The recent volatility around December's 'hawkish' FOMC is seen as different from previous episodes, with rising yields and a strengthening DXY indicating confidence in growth [20]. * Analyst Stock Ratings: Morgan Stanley uses a relative rating system with terms like Overweight, Equal-weight, Not-Rated, or Underweight [41]. * Important Disclosures: The report includes important disclosures regarding the relationship between the companies mentioned and Morgan Stanley, as well as other regulatory disclosures [43-46].