In the past several months, Wall Street has been increasing its expectations of a September interest rate hike, but Morgan Stanley disagrees. According to a new report by analyst Matthew Hornback, the firm believes there is a 90 percent chance that the Federal Reserve will choose not to raise rates in September.

Downside To U.S. Data

Morgan Stanley sees a couple of troubling indicators that upcoming U.S. economic data could fall short of consensus expectations. First, the firm’s AlphaWise U.S. retail sales tracker indicates only a 0.2 percent month-over-month (M/M) increase in U.S. retail sales in August, lower than Bloomberg’s consensus estimate of 0.4 percent.

Second, the firm’s AlphaWise Real-time Indicator of economic Activity (ARIA) index showed a M/M deceleration of activity in August.

Long Treasuries

Morgan Stanley has…

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