The Boost From Easing Market Rules

Watch on YouTube ↗  |  January 15, 2026 at 21:44  |  4:11  |  Morgan Stanley
Speakers
Andrew Sheets — Chief Cross-Asset Strategist, Morgan Stanley

Summary

Andrew Sheets of Morgan Stanley discusses how simultaneous easing of monetary, fiscal, and regulatory policy is creating a supportive backdrop for markets. He highlights U.S. bank capital rule changes that could free up balance sheet capacity, the Fannie/Freddie mortgage purchase program that has tightened agency MBS spreads, and the large AI/data-center spending wave. He concludes that markets may run hot with valuations overshooting, while agency mortgage spreads are now largely priced and the mortgage strategy team has turned neutral.

  • Andrew Sheets frames policy easing as a global theme across monetary, fiscal, and regulatory channels.
  • Morgan Stanley expects over $3 trillion of AI and data-center spending through 2028.
  • U.S. bank capital rule finalization could free up about $5.8 trillion of balance-sheet capacity for G-SIBs.
  • Fannie Mae and Freddie Mac will buy $200 billion of mortgages, tightening agency MBS spreads.
  • The mortgage strategy team has moved from positive to neutral on agency mortgage spreads.
  • Simultaneous easing supports a market that runs hot and valuations that may overshoot.
Ideas
Andrew Sheets Chief Cross-Asset Strategist, Morgan Stanley 0:41
AI data-center spending supports infrastructure theme.
Morgan Stanley expects over $3 trillion of AI and data-center-related spending through the end of 2028, which is a large supportive force for markets and the AI/data-center infrastructure theme.
SKYY MED
Andrew Sheets Chief Cross-Asset Strategist, Morgan Stanley 2:28
Bank capital rule easing frees capacity.
Finalization of key capital rules later this year could free up about $5.8 trillion of balance-sheet capacity across global systemically important banks, a positive regulatory catalyst for bank equities.
Global systemically important banks (G-SIBs) HIGH
Andrew Sheets Chief Cross-Asset Strategist, Morgan Stanley 3:17
Triple policy easing supports hot markets.
The simultaneous easing of monetary, fiscal, and regulatory policy is unusual and normally only deployed under more dire economic conditions; this broad-based support, alongside large AI/data-center spending, should keep markets running hot and could push valuations to overshoot.
VT HIGH
Andrew Sheets Chief Cross-Asset Strategist, Morgan Stanley 3:30
Agency MBS rally largely priced in.
The U.S. mortgage agencies' $200 billion purchase of mortgages to hold on balance sheet quickly tightened agency mortgage spreads; the mortgage strategy team had been positive but has turned neutral because the shift is now largely priced.
Agency MBS spreads HIGH
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This Morgan Stanley video, published January 15, 2026, features Andrew Sheets discussing SKYY, Global systemically important banks (G-SIBs), VT, Agency MBS spreads. 4 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Andrew Sheets  · Tickers: SKYY, Global systemically important banks (G-SIBs), VT, Agency MBS spreads