The bond market is doing the Fed’s job, and that could be good news for stocks, says Morgan Stanley strategist

Published 12 Oct 2026, 09:26 UTC. Updated 12 Oct 2026, 13:53 UTC.

A stronger dollar, higher bond market yields and elevated gas prices are already tightening financial conditions in the U.S. to the point that Kevin Warsh may not even need to hike rates.

Directly affected

MS Morgan Stanley
Named in this report.

Indirectly affected

LMT Lockheed Martin
Defense contractors get more work when conflict spending rises
RTX RTX
Defense contractors get more work when conflict spending rises
NOC Northrop Grumman
Defense contractors get more work when conflict spending rises
GD General Dynamics
Defense contractors get more work when conflict spending rises
JPM JPMorgan Chase
Bank profits move with lending and interest rates
BAC Bank of America
Bank profits move with lending and interest rates
ITA iShares U.S. Aerospace & Defense
A fund of aerospace and defense companies
BA Boeing
Defense and aerospace orders move with conflict spending
LHX L3Harris
Defense contractors get more work when conflict spending rises
HII Huntington Ingalls
Shipyards benefit when naval spending rises

Price reaction, T-5 to T+3

Ticker	T-5	T-3	T-1	T0	T+1	T+2	T+3
MS	—	—	—	—	—	—	—
LMT	—	—	—	—	—	—	—
RTX	—	—	—	—	—	—	—
NOC	—	—	—	—	—	—	—
GD	+0.12%	-1.46%	—	+1.14%	+0.35%	+0.99%	+1.70%
JPM	—	—	—	—	—	—	—
BAC	-0.48%	-1.44%	—	+0.48%	-0.66%	-5.34%	-4.84%
ITA	+0.06%	-1.47%	—	-0.28%	-1.26%	-1.17%	+0.09%
BA	+1.20%	-1.13%	—	-0.50%	-2.05%	-3.08%	-0.90%
LHX	—	—	—	—	—	—	—
HII	+0.73%	-1.48%	—	-0.20%	-2.61%	-0.05%	+1.02%

A stronger dollar, higher bond market yields and elevated gas prices are already tightening financial conditions in the U.S. to the point that Kevin Warsh may not even need to hike rates.

Source: MarketWatch

The price since 12 Oct 2026: Ishares J.P. Morgan Em Local Currency Bond Etf (LEMB) versus the S&P 500

Since the first closing price after “The bond market is doing the Fed’s job, and that could be good news for stocks, says Morgan Stanley strategist,” Ishares J.P. Morgan Em Local Currency Bond Etf (LEMB) is -0.08%. The S&P 500 fund (SPY) is -1.47% over the same days, a +1.39% difference versus the market. industrial stocks (XLI) is -1.14%, a +1.06% difference versus that group of stocks.

Company	When	Move	Status
BA	that day	-0.50%	final price
BA	the next day	-2.05%	final price
BA	two days later	-3.08%	final price
BA	three days later	-0.90%	final price
BA	three days earlier	-1.13%	final price
BA	five days earlier	+1.20%	final price
BAC	that day	+0.48%	final price
BAC	the next day	-0.66%	final price
BAC	two days later	-5.34%	final price
BAC	three days later	-4.84%	final price
BAC	three days earlier	-1.44%	final price
BAC	five days earlier	-0.48%	final price
GD	that day	+1.14%	final price
GD	the next day	+0.35%	final price
GD	two days later	+0.99%	final price
GD	three days later	+1.70%	final price
GD	three days earlier	-1.46%	final price
GD	five days earlier	+0.12%	final price
HII	that day	-0.20%	final price
HII	the next day	-2.61%	final price
HII	two days later	-0.05%	final price
HII	three days later	+1.02%	final price
HII	three days earlier	-1.48%	final price
HII	five days earlier	+0.73%	final price
IShares U.S. Aerospace & Defense ETF (ITA)	that day	-0.28%	final price
IShares U.S. Aerospace & Defense ETF (ITA)	the next day	-1.26%	final price
IShares U.S. Aerospace & Defense ETF (ITA)	two days later	-1.17%	final price
IShares U.S. Aerospace & Defense ETF (ITA)	three days later	+0.09%	final price
IShares U.S. Aerospace & Defense ETF (ITA)	three days earlier	-1.47%	final price
IShares U.S. Aerospace & Defense ETF (ITA)	five days earlier	+0.06%	final price

LEMB

SPY

XLI

Companies in defense around Ishares J.P. Morgan Em Local Currency Bond Etf (LEMB)

Companies mentioned with this story

LEMB Ishares J.P. Morgan Em Local Currency Bond Etf
For “The bond market is doing the Fed’s job, and that could be good news for stocks, says Morgan Stanley strategist,” Ishares J.P. Morgan Em Local Currency Bond Etf (LEMB) is linked, with no stored direction, medium confidence. Reason on file: GA selected LEMB as a RELATED security because its canonical security name directly matches this event's themes: morgan, bond. This is an explainable DERIVED market relationship, not a claim that the security was named in the source article
ITA IShares U.S. Aerospace & Defense ETF
IShares U.S. Aerospace & Defense ETF (ITA) is linked, with no stored direction, medium confidence in the 12 Oct 2026 story “The bond market is doing the Fed’s job, and that could be good news for stocks, says Morgan Stanley strategist.” Reason on file: Material security escalation can alter defense demand expectations and risk premia
XAR Spdr Series Trust
In “The bond market is doing the Fed’s job, and that could be good news for stocks, says Morgan Stanley strategist,” Spdr Series Trust (XAR) is linked, with no stored direction, medium confidence. Reason on file: Material security escalation can alter defense demand expectations and risk premia
CVIE Morgan Stanley Etf Trust
For “The bond market is doing the Fed’s job, and that could be good news for stocks, says Morgan Stanley strategist,” Morgan Stanley Etf Trust (CVIE) is linked, with no stored direction, medium confidence. Reason on file: GA selected CVIE as a RELATED security because its canonical security name directly matches this event's themes: stanley, morgan. This is an explainable DERIVED market relationship, not a claim that the security was named in the source article
CVLC Morgan Stanley Etf Trust
For “The bond market is doing the Fed’s job, and that could be good news for stocks, says Morgan Stanley strategist,” Morgan Stanley Etf Trust (CVLC) is linked, with no stored direction, medium confidence. Reason on file: GA selected CVLC as a RELATED security because its canonical security name directly matches this event's themes: stanley, morgan. This is an explainable DERIVED market relationship, not a claim that the security was named in the source article
MS Morgan Stanley
For “The bond market is doing the Fed’s job, and that could be good news for stocks, says Morgan Stanley strategist,” Morgan Stanley (MS) is linked, with no stored direction, medium confidence. Reason on file: GA selected MS as a RELATED security because its canonical security name directly matches this event's themes: stanley, morgan. This is an explainable DERIVED market relationship, not a claim that the security was named in the source article
MSDL Morgan Stanley Direct Lending Fund
Morgan Stanley Direct Lending Fund (MSDL) is linked, with no stored direction, medium confidence in the 12 Oct 2026 story “The bond market is doing the Fed’s job, and that could be good news for stocks, says Morgan Stanley strategist.” Reason on file: GA selected MSDL as a RELATED security because its canonical security name directly matches this event's themes: stanley, morgan. This is an explainable DERIVED market relationship, not a claim that the security was named in the source article
MSBT Morgan Stanley Bitcoin Trust
In “The bond market is doing the Fed’s job, and that could be good news for stocks, says Morgan Stanley strategist,” Morgan Stanley Bitcoin Trust (MSBT) is linked, with no stored direction, medium confidence. Reason on file: GA selected MSBT as a RELATED security because its canonical security name directly matches this event's themes: stanley, morgan. This is an explainable DERIVED market relationship, not a claim that the security was named in the source article

Ishares J.P. Morgan Em Local Currency Bond Etf (LEMB) and the defense link

Ishares J.P. Morgan Em Local Currency Bond Etf (LEMB) is the company in “The bond market is doing the Fed’s job, and that could be good news for stocks, says Morgan Stanley strategist,” the 12 Oct 2026 Defense story.

Ishares J.P. Morgan Em Local Currency Bond Etf (LEMB) is on the page because GA selected LEMB as a RELATED security because its canonical security name directly matches this event's themes: morgan, bond. This is an explainable DERIVED market relationship, not a claim that the security was named in the source article

Also listed, IShares U.S. Aerospace & Defense ETF (ITA): Material security escalation can alter defense demand expectations and risk premia

What this defense story puts on the calendar

ITA traded between 201.08 and 217.79 across 20 sessions. The latest close on file is 207.60. LEMB traded between 41.92 and 42.91 across 20 sessions. The latest close on file is 42.41. XAR traded between 216.28 and 245.40 across 20 sessions. The latest close on file is 223.20.

What the saved facts support for Ishares J.P. Morgan Em Local Currency Bond Etf (LEMB)

46 out of 100

“The bond market is doing the Fed’s job, and that could be good news for stocks, says Morgan Stanley strategist” scores 46 out of 100. The score uses 1 sources, and 11 linked companies.