Morgan Stanley research has found that when the S&P 500, U.S. Treasury yields, and the U.S. Dollar Index exhibit extreme resonance (volatility exceeding 1.25 standard deviations), it can predict the U.S. dollar’s movement over the next six months. Two key signals for shorting the dollar are as follows: The “Goldilocks” scenario (rising stock markets, falling dollar and Treasuries) has an 83% success rate, with the dollar averaging a 3.3% decline, while the British pound performs best; the “All-Up” scenario (all three rising simultaneously) has a 73% success rate, with the dollar averaging a 2.7% decline, led by the Australian dollar. Such signals have appeared multiple times in 2025, indicating that market volatility is at a historical high.
Morgan Stanley’s latest research indicates that when the S&P 500, U.S. Treasury yields, and the U.S. Dollar Index exhibit extreme ‘resonance,’ it often signals an impending reversal of the strong…
