U.S. equities are showing increased short-term sensitivity to inflation-adjusted interest rates, according to a Morgan Stanley note from analysts including Michael Wilson and Andrew Pauker. They report the rolling one-month correlation between the benchmark and real yields recently dropped to its strongest inverse correlation in four months.

This tactical shift suggests that while resilient fundamentals will guide 3-6 month returns, real rate fluctuations are now more critical for the near-term setup of major indices. The analysts attribute this to upcoming macro announcements and data releases, including this week's key Federal Reserve policy decision.

With the Fed widely expected to hold rates steady between 3.5% and 3.75%, markets are bracing for a wave of corporate earnings from tech giants. Morgan Stanley anticipates these reports will serve as stock-specific catalysts rather than an index-level driver, even with a potential tailwind from recent dollar weakness.