U.S. markets are too complacent about rising interest rates and "quantitative tightening," an expert told CNBC on Tuesday.
This complacency comes as the Federal Reserve looks to unwind its balance sheet of several trillion dollars' worth of treasury and mortgage-backed securities and markets, Hans Redeker, global head of FX Strategy at Morgan Stanley, said.
"The Fed is, from October, going to absorb $600 billion (of securities on its balance sheet) on an annualized basis, (interest) rates are going up, and I think in the market there is too much debate about rates and not the combined effect (of these events)," Redeker said.
"At the end of the day we're in an environment of quantitative tightening plus higher interest rates and is that really what the market is currently pricing? I doubt that," he added.
Redeker likened the U.S. stock market to a "self-propelled car" that didn't have much further to run. "It currently looks like we are, in respect to the U.S. market, like a self-propelled car with a rusty chassis," he said.