A Morgan Stanley strategist said that if the Federal Reserve raises interest rates as scheduled this week, it is likely that high-quality US stocks will reap excessive profits. The strategist pointed out that judging from historical rules, in the first interest rate hike phase of the austerity cycle, high-quality blue-chip stocks often outperformed the market. The research team led by Michael Wilson wrote in the research report: “It is also worth noting that cyclical stocks and momentum stocks usually perform well after the first rate hike.” Strong economic growth is currently driving up interest rates, not fiscal sustainability issues or higher-than-expected inflation. The main risk in the future is that if the blockade of the Strait of Hormuz is compounded by a recovery in Chinese consumption, oil prices may suddenly soar, causing an unexpected inflationary shock. This may “transform what currently appears to be a moderate, preventive policy adjustment into a cycle of interest rate hikes that lasts longer in the eyes of the market.”

A Morgan Stanley strategist said that if the Federal Reserve raises interest rates as scheduled this week, it is likely that high-quality US stocks will reap excessive profits. The strategist pointed out that judging from historical rules, in the first interest rate hike phase of the austerity cycle, high-quality blue-chip stocks often outperformed the market. The research team led by Michael Wilson wrote in the research report: “It is also worth noting that cyclical stocks and momentum stocks usually perform well after the first rate hike.” Strong economic growth is currently driving up interest rates, not fiscal sustainability issues or higher-than-expected inflation. The main risk in the future is that if the blockade of the Strait of Hormuz is compounded by a recovery in Chinese consumption, oil prices may suddenly soar, causing an unexpected inflationary shock. This may “transform what currently appears to be a moderate, preventive policy adjustment into a cycle of interest rate hikes that lasts longer in the eyes of the market.”