Are We There Yet?
At DoubleLine, we find the Fed started explicitly tightening the shadow rate or the "effective" interest rate as early as June 2014. The Wu-Xia shadow rate reached its lowest level of -3.0% in May 2014 during the Fed's taper, just a few months before the Fed completed their bond buying program. Since then the shadow rate rose steadily back to zero in November last year, just before the Fed made its first interest rate hike.
High Yield Signals Trouble
Over the past twelve months there has been a growing divergence between the performance of high yield corporate bonds and U.S. equities. Given the historically strong correlation between these two markets, we believe this divergence is a warning sign to market participants. High yield corporate bond spreads reached their tightest levels in June 2014 and have since continued to widen even though equity markets have continued to rally. What are investors to make of this unusual divergence between these two asset classes which are normally highly correlated?
DoubleLine Video & Articles
Jeffrey Gundlach - DoubleLine Overview
Fixed Income Asset Allocation
Global Developed Credit - Floating Rate
Long Duration Total Return
Low Duration Emerging Markets
Shiller Enhanced CAPE®
Information presented was current as of the date the material was prepared by an outside party. DoubleLine assumes no duty to update this information.
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