DoubleLine Deputy CIO Jeffrey Sherman joins Bloomberg’s The Close to discuss why the firm’s not backing away from the front end of the U.S. Treasury yield curve despite a rough year for bonds. With the curve remaining stubbornly flat, Mr. Sherman says a spread of 25 basis points to 30 basis points just isn’t enough to justify DoubleLine reaching into intermediate maturities. In addition, he’s skeptical of Treasury Secretary Scott Bessent’s recent efforts to tamp down long-term yields. “If he’s really serious about getting the back end of the curve under control, he needs to bring out the bazooka,” Mr. Sherman says, calling the buyback more about testing the plumbing than solving the problem.
On corporate credit, he flags a growing wave of AI hyperscaler debt issuance tied to capital expenditure, with Wall Street estimates for next year’s buildout ranging from $900 billion to $1.4 trillion. He sees value in shorter-dated paper from companies like Alphabet and Meta that have other profitable pursuits supporting the debt, but he draws a line against names that are nominally investment grade. Pointing to companies like SpaceX, Oracle and the Paramount leveraged buyout, he notes, “They’re really borrowing like they’re investment grade companies, but the profile is probably a below-investment-grade name given those debt loads.” DoubleLine’s approach is selective rather than wholesale, avoiding what Mr. Sherman calls an asset liability mismatch between fragile data-center economics and the bonds financing them.
Jeffrey Sherman, DoubleLine’s Deputy Chief Investment Officer, is a thought leader, portfolio manager and public speaker in the industry. Mr. Sherman is a member of DoubleLine’s Fixed Income and Global Asset Allocation committees, and he serves as lead portfolio manager for the firm’s multi-sector and derivative-based strategies. In his role, Mr. Sherman guides the investment teams in developing top-down macro views and collaborative asset allocation processes throughout a market cycle. Additionally, he is a member of DoubleLine’s Executive Management Committee. In 2018, Money Management Executive named Mr. Sherman as one of “10 Fund Managers to Watch” in its yearly special report. Prior to joining DoubleLine in 2009, Mr. Sherman was a Senior Vice President at TCW, where he worked as a portfolio manager and quantitative analyst focused on fixed income and real-asset portfolios. Prior to that, he was a statistics and mathematics instructor at the University of the Pacific and Florida State University. Mr. Sherman taught Quantitative Methods for Level I candidates in the USC/CFALA CFA® Review Program for many years. He holds a B.S. in Applied Mathematics from the University of the Pacific and an M.S. in Financial Engineering from Claremont Graduate University. Mr. Sherman is a CFA® charterholder.
