DoubleLine Deputy CIO Jeffrey Sherman joins CNBC's Squawk on the Street to unpack Fed Governor Waller's comments and what they mean for the bond market. Sherman sees Waller as effectively the tie-breaking vote on the committee, and his unexpectedly dovish tone drove today's front-end rally, though Sherman remains more focused on the ISM services prices paid data, which shows inflation pressure building well beyond the tariff and manufacturing narrative. Looking back at Fed Chair Warsh's last three public appearances, Sherman notes the consistent focus has been inflation, not labor, and argues that if Warsh is serious, the Fed likely needs to hike regardless of tomorrow's jobs number just to demonstrate real commitment to fighting inflation.
On why a hike matters even if 25 basis points won't meaningfully alter hyperscaler CapEx plans, Sherman is direct: it isn't really about controlling AI-driven spending at the margin, it's about signaling to the bond market that the Fed is serious and willing to act, which he believes is the most effective way to contain upward pressure on the long end. On positioning, Sherman continues to favor the front end of the curve, where credit still looks attractive even with modest recent spread widening in hyperscaler names, paired with some rate exposure in the five-to-seven year belly as a hedge against a potential growth slowdown. He avoids long duration credit altogether, and points to a blended approach, short duration credit mixed with belly exposure and agency mortgages, as a way to capture real, inflation-beating yield in the current environment.
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.
