I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody. – Democratic Election Strategist James Carville, 1993
I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.
DoubleLine Portfolio Manager Eric Dhall and Analyst Mark Kimbrough survey a “neck-snapping” week ended May 15 that saw stocks (0:32) sell off Friday after the S&P 500 marked an all-time high on Thursday. The party crasher came from the fixed income market (3:27). Inflation-focused bond vigilantes sent Treasury yields higher by 20 basis points or more from two-year to 30-year tenors across the curve. The Bloomberg Commodity Index (9:21) edged higher, amid wide dispersion, as energy rallied, copper was flat and precious metals were sold.
Macro news (11:21) began with a consensus-matching April CPI on Tuesday but was dominated by an April PPI on Wednesday showing broad signs of inflation. Eric Dhall suggests Friday’s fixed income vigilantism amounted to a “delayed reaction” to the week’s earlier inflation news. Eric and Mark note fed funds futures are pricing in a Fed standing pat until July 2027. The May 18-22 week will be a light one for the statistical mills, with the most notable items being an FOMC minutes release, jobs claims and S&P Global manufacturing and services reports.
Mr. Dhall joined DoubleLine in 2013. He is a Portfolio Manager on the Macro Asset Allocation team, where he works with portfolio management performing analysis and trading for derivatives-based and multi-asset strategies. His research and analysis has contributed to the team’s development of DoubleLine’s smart-beta suite of strategies. Mr. Dhall also co-hosts DoubleLine’s weekly “Minutes” podcast (X @DLineMinutes, Minutes@Doubleline.com). Prior to DoubleLine, he worked at Capital Group, performing quantitative analysis in fixed income. Prior to Capital Group, Mr. Dhall was an instructor in finance at the UCLA Anderson School of Management and a research instructor at the UCLA Samueli School of Engineering. Prior to that, he worked in International Finance at Gulf Machinery Co. Mr. Dhall holds a B.S. in Physics with a secondary emphasis in Business from the University of California, Berkeley, and an M.S. in Financial Engineering from the UCLA Anderson School of Management.
Mr. Kimbrough joined DoubleLine in 2012, working primarily on Agency Mortgage-Backed Securities and the Fixed Income Asset Allocation process as a member of the Risk Analyst team. He transitioned in 2019 to his current role as an Analyst on the Macro Asset Allocation team. Mr. Kimbrough also co-hosts DoubleLine’s weekly “Minutes” podcast (X @DLineMinutes, Minutes@Doubleline.com). Prior to DoubleLine, Mr. Kimbrough was at WAMCO, working on systems monitoring and development within the Risk Department. He holds a B.S. in Business Administration with a concentration in Real Estate Finance and a minor in Economics from the University of Southern California. Mr. Kimbrough is a CFA® charterholder.
