Morgan Stanley: It is advisable to short the dollar in the "golden-haired girl" environment.

Jin10 data reported on October 20, Morgan Stanley's latest research report pointed out that if investors want to profit from the “golden girl” environment—where U.S. stocks rise while losses on government bonds are controlled—they should choose shorting the dollar. The bank analyzed the correlation between the dollar and the daily returns of the S&P 500 index and 10-year benchmark U.S. Treasury bonds through historical data, identifying eight types of performance patterns in U.S. assets, with the above scenario included. Earlier this year, the linkage between the dollar and other assets became a market focus—where the dollar and the stock market fell in sync, diverging from its traditional safe-haven attributes. Subsequently, the traditional negative correlation between the dollar and the stock market reappeared: at the beginning of this month, when the S&P 500 index soared to a new record high, the Exchange Rate of the dollar continued to hover at low levels. According to Morgan Stanley's analysis, on trading days when the U.S. stock market rises by 1.25 standard deviations or more, if the dollar and 10-year U.S. Treasury yield declines do not exceed 1.25 standard deviations, shorting the dollar against the British pound will become the best trading strategy.