June 16, 2023 | Monday Morning Minutes

MMM Episode 120: The Fed ‘Skips’ and/or ‘Pauses’ Its Rate Hikes

After a rundown of the markets and macro news for June 12-16, DoubleLine’s Jeffrey Mayberry and Samuel Lau cover the June FOMC meeting and Federal Reserve Chair Jerome H. Powell’s press conference (15:31). The federal funds rate remained unchanged, and Sam goes through what that meant for the interest charged on reserves, the overnight reverse repo facility*, the amount available to borrow at the banking window and the caps on quantitative tightening (QT). He then recaps the Summary of Economic Projections (17:32), which maintains the Fed’s hawkish stance on potential tightening (a position echoed in post-meeting Fedspeak (13:12)). Jeff then runs down Powell’s Other Way ’Round Bro press conference (20:57), where in a break from tradition Powell’s comments bolstered market activity as the event went on. Jeff discusses how similar Powell’s language was to the last press conference, flagging exceptions such as the Fed chair’s parsing of “skip” and “pause” in regard to the June rates decision. Once again, Powell masterfully avoided any answers on QT policy.

In the breakdown of the market week, Sam notes that risk assets really liked Wednesday’s Fed move (2:11), with the S&P 500 surging, while fixed income shrugged off the hike break (4:36). Commodities scored their second up week in a row (6:52) and Bitcoin was flat (8:25). Macro Land (9:18) had a very busy week beyond the FOMC meeting, including CPI and PPI prints as well as retail sales numbers and jobless claims. Next week’s holiday-shortened week will bring a run of Fed officials speaking in public (32:43). This episode was recorded before market close on June 16, 2023.

*For more on the overnight reverse repo facility, check out: MMM Episode 112: Red Week, Recession Metrics and the Overnight Reverse Repo Facility

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  • Jeffrey Mayberry

    Macro-Asset Allocation

    Jeffrey Mayberry

    Macro-Asset Allocation

    Mr. Mayberry joined DoubleLine in 2009. He is a Portfolio Manager on DoubleLine’s strategic commodity strategy while working in portfolio management and trading for derivatives‐based and multi‐asset strategies. Mr. Mayberry is a Strategist on the Fixed Income Asset Allocation (FIAA) committee and a contributing member on our Global Asset Allocation and Macro committees. He also co-hosts DoubleLine’s weekly Monday Morning Minutes (Twitter @DLineMinutes, podcast. Prior to DoubleLine, Mr. Mayberry was a Senior Vice President at TCW for nine years within the Mortgage Group, where he specialized in portfolio and fund monitoring and analytics. He holds a B.S. in Engineering from Harvey Mudd College and an M.S. in Financial Engineering from the Peter F. Drucker Graduate School of Management at Claremont Graduate University.

  • Samuel Lau

    Macro-Asset Allocation

    Samuel Lau

    Macro-Asset Allocation

    Mr. Lau joined DoubleLine in 2009. He is a Strategist on the Fixed Income Asset Allocation (FIAA) Committee and a contributing member on the Global Asset Allocation and Macro committees. Mr. Lau is a Portfolio Manager on DoubleLine’s strategic commodity strategy while working in portfolio management and trading for derivatives-based and multi-asset strategies, including DoubleLine's Shiller Enhanced CAPE®, Shiller Enhanced International CAPE®, Real Estate and Income, and Multi-Asset Trend strategies. He also co-hosts the Sherman Show (Twitter @ShermanShowPod, and Monday Morning Minutes (Twitter @DLineMinutes, podcasts. Prior to DoubleLine, Mr. Lau was a Vice President at TCW where he worked under Jeffrey Gundlach as a Research Analyst in the Mortgage Group. He holds a B.S. from the University of Wisconsin, Madison and an MBA from the Marshall School of Business at the University of Southern California.