DoubleLine Portfolio Manager Ken Shinoda returns with his latest Channel 11 update at a time when the bond market is taking a beating. “It’s been somewhat of a bloodbath, especially in longer-duration bonds,” Mr. Shinoda says, with the five-year U.S. Treasury yield back at 5% from under 3.75% in April and the 30-year Treasury near levels not seen since the early 2000s. Stocks keep hitting new highs, but the rally is narrow, driven by a handful of Mag 7 names as market breadth sits at its weakest level since the dot-com era. Booming commodities and a surge in AI-driven capital expenditure are feeding strong growth and stubborn inflation concerns, and the market is now pricing in several Federal Reserve hikes.
Mr. Shinoda is quick to point out that this is nowhere near 2022. Today’s higher yields cushion the damage, with Treasuries down about 2.8% this year compared with double-digit losses back then. In this environment, he sees the most interest in short-duration, high-quality securitized credit and floating-rate paper. They pay 120 to 150 basis points over short Treasuries or SOFR without taking on long-end risk. He also flags a growing divergence in corporate credit, where SpaceX and Oracle trade like below-investment-grade names, and a jump in French spreads to the widest level versus Germany since the 2011 to 2012 sovereign crisis. “Whenever you see this hockey stick move up, it’s not really a good sign,” he says.
Mr. Shinoda joined DoubleLine at inception in 2009. He is Chairman of the Structured Products Committee and oversees the non-Agency RMBS team specializing in investing in non-Agency mortgage-backed securities, residential whole loans and other mortgage-related opportunities. Mr. Shinoda is co-Portfolio Manager on the Total Return, Opportunistic Income, Income, Opportunistic MBS and Strategic MBS strategies. He is also lead Portfolio Manager overseeing the Mortgage Opportunities private funds. Mr. Shinoda is also a permanent member of the Fixed Income Asset Allocation Committee, as well as, participating in the Global Asset Allocation Committee. In addition, he hosts DoubleLine’s “Channel 11 News” (Twitter @DLineChannel11, dline11@doubleline.com), a webcast series that provides market insights and commentary with peers and industry experts. Prior to DoubleLine, Mr. Shinoda was Vice President at TCW where he worked in portfolio management and trading. He holds a B.S. in Business Administration from the University of Southern California and is a CFA® charterholder.
