Morgan Stanley’s strategists see US stocks and bonds outperforming their emerging markets peers next year, according to a note to clients.

The prospect of global interest rates remaining higher for longer is tipping the case for many investors to switch into bonds from stocks.

The old playbook of selling emerging-market bonds when Treasury yields spike is being upended by the positive dynamics favoring developing-nation debt.

The threat of recession is making debt securities a safer bet, while the stock market is yet to price in those risks.

Traders unnerved by a selloff that hit stocks and bonds alike are looking for refuge, increasing the appeal of investments offering reliable returns such as shares that pay steady dividends.