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Mar 25, 2022 | DoubleLine Minutes

MMM Episode 58: Hard Look at the Fed’s Rare “Soft Landings”

After reviewing market and macro news for the week of March 21-25, DoubleLine’s Jeff Mayberry and Samuel Lau answer a listener’s question on how quantitative tightening (QT) could impact the 10-year U.S. Treasury yield (19:41) as well as the TIPS market, in which the Federal Reserve has a large footprint. Jeff and Sam look back at previous QT periods and note the accelerated pace of plans for interest rate hikes and balance sheet reduction in 2022. After discussing a pair of alliterative QT events, the Taper Tantrum and Powell Pivot (24:18), the duo reviews hiking cycles in 1984 and 1994 that Fed Chair Jerome H. Powell says resulted in economic soft landings (29:21), with the lack of inflation a key factor both times. Jeff and Sam conclude the segment with a breakdown of QT’s possible impact on the TIPS market and breakevens (33:29).*

The week of March 21-25 delivered a lot of action in U.S. soccer as well as a risk-on sentiment in the markets (2:05). The S&P 500 had a strong week, Fixed Income Land observed some curve flattening (3:18), and while commodities stayed strong (6:22), the nickel market remained reined in (7:42). The past week was relatively light on macro news (9:42); next week’s macro numbers will include home prices, JOLTS data and nonfarm payrolls (40:14).

*The following previous episodes contain more information on this week’s topic:

Real and Nominal Yield Curves

What Is a Bear Flattener?

FOMC Guidance on Tapering

ABOUT THE HOSTS

ABOUT THE HOSTS

  • 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 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, Minutes@Doubleline.com) 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, ShermanShow@Doubleline.com) and Monday Morning Minutes (Twitter @DLineMinutes, Minutes@Doubleline.com) 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.