Morgan Stanley: Get Aboard the Ark!

It’s becoming quite the fashionable trade these days, boarding the ark and all, waiting for the floods. Meanwhile, I’ve was building the ark when all of you were out frolicking about the prairie, enjoying the sunshine and the green grass. Now that markets have plunged and bonds have risen, everyone wants a seat.

With yields on U.S. 10-year notes within half a percentage point of an all-time low, Morgan Stanley strategists say there’s more room for them to fall as economic data underperform economists’ estimates. They also recommend bullish positions in bunds and gilts. The yield on the Bloomberg Global Developed Sovereign Bond Index dropped to 0.77 percent on Friday, extending its decline to the lowest level since at least the start of 2010.

“Despite the meaningful decline in sovereign yields since the Fed lifted off in December, we would rather overstay our welcome than miss a continuation of the move to lower yields,” analysts led by New York-based Matthew Hornbach, head of global interest rate strategy, wrote in a client note dated Feb. 6. “We do not think Fed Chair Yellen’s testimony will loosen financial conditions enough for global yield curves to steepen.”

Well I have news for you late comers: we have very little space left on the ark. If you want to come aboard, I have a few seats left next to the Venus fly traps and the mongoose. Other than that, you’re gonna have to pray for dryer climes.