Tracy Alloway:

Much ink has been spilled over the leakage of collapsing crude prices into wider markets.
 
 A note from Morgan Stanley analysts led by Chief Cross-Asset Strategist Andrew Sheets demonstrates the degree to which the fortunes of the energy sector are currently driving stocks and bonds, while emphasizing that the correlation is “overstated.”
 
 Stripping out the impact of the energy sector reveals a far different picture for industrial production, corporate earnings, and inflation around the world.
 
 “Oil’s role in driving hour-by-hour market moves is overstated. But its place in the broader macro debate remains central,” write the analysts. “Energy companies are no longer leading equity or credit indices higher or lower. In our view, oil and markets are moving together because they are driven by similar things: concerns over growth, a lack of risk appetite, [and] a relentlessly strong trade-weighted dollar.”