After reviewing market and macro news for the week of March 28-April 1, DoubleLine’s Jeff Mayberry and Samuel Lau – in the international spirit of the just-unveiled men’s World Cup draw – field a question from Charles, a listener in France, on whether we should be paying attention to the real U.S. Treasury yield curve over the nominal yield curve in the wake of the Federal Reserve’s balance-sheet expansion since the Global Financial Crisis and in the COVID-19 era (20:04)*. Charles also asks if the increased steepening of the real yield curve this year should spur the Fed to be more aggressive in hiking the target federal funds rate. Basically, Jeff and Sam seek to answer: Are things different this time? They say no. With help from the DoubleLine team, they discuss the Fed’s lack of control over the real yield curve, which is mainly shaped by the market (22:12), and the real yield curve’s use as an economic indicator (27:49).
Jeff and Sam review a mixed March 28-April 1 market week as well as a rough first quarter, including the Agg’s worst quarter since 1980 (2:42). Their rundown of Macro Land includes some surprises, including home prices to the up side and personal spending to the down side, and more signs of a strong labor market (13:55). Next week will bring a chance to dig in to the minutes from the Federal Open Market Committee’s March meeting. This episode was recorded April 1, 2022.
*For more information on the U.S. Treasury yield curve, check out:
MMM Episode 52: Yield Curve Flattening as an Economic Indicator
