Channel 11: Tech It to the Limit

(00:00) In his monthly review of macro and markets through June 2024 (0:05), DoubleLine Portfolio Manager Ken Shinoda on July 2 first surveys the extraordinary dominance of a handful of tech stocks, the market caps of the top seven mega caps now exceeding the capitalizations of all largest national stock markets outside the U.S. Beyond equities, commodities (6:01) were a “mixed bag” within the complex and flat to up YTD depending on one’s choice of index. Positive correlation of the U.S. dollar (6:37) to U.S. Treasury yields, he says, suggests further near-term dollar strength in given expectations of higher rates.

On the fixed income front (7:03), Mr. Shinoda points out that despite macro gauges pointing to slowing growth, Treasury yields recently backed up across the 5-, 10- and 30-year tenors. “I think this is less about growth. More of this happened after the debates,” which heightened concerns about the federal fiscal situation and future debt issuance. In his review of fixed income performance (9:38), looking through the rear-view mirror, Mr. Shinoda notes “the place to be” has been “a mix of credit outside of corporate bonds, which are longer duration. So high yield levered loans, securitized credit up about somewhere between 1% to 3% depending on how much risk you're taking, and if they're fixed or floating rate assets.” But looking forward from where spreads stand end-June (11:13), he notes that Agency mortgage-backed securities, which have been left out of the recent spread compression in structured product, now offer the most attractive relative.