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July 22, 2022 | Monday Morning Minutes

MMM Episode 75: A + Week for Stocks, Bonds, Commodities, But More Recessionary Signals

Along with their review of a positive week July 18-22 for the broad stock (1:21), fixed income (6:43) and commodities indexes (7:50), Jeff Mayberry and Samuel Lau look at a variety of indicators that appear to signal rising odds of a U.S. recession. They note that Treasury yield curve (4:10) has already been inverted at two-year versus 10-year tenors, a gauge favored by market operators. Turning to a spread followed by academics, Sam points out that the 3-month T-bill yield as of Friday was 22 basis points higher on the week, closing in on the yield of the 10-year Treasury note. Jeff thinks “we’ll continue to see the three-month bill continue to climb in terms of rates, and that academic point will be inverted relatively soon.”


In their review of the week’s macro news (10:28), after noting a slight increase in jobless claims, they focus on Thursday’s deteriorating Leading Economic Index, which fell 0.8% versus expectations of a 0.2% decline. With the LEI year-over-year change now at 1.4%, Mayberry notes the index is close to the sub-zero zone that, albeit subject to past false positives, is a recessionary signal (11:19). “If you couple that with the inverted yield curve, it certainly seems like a recession will be forthcoming.” In addition, the preliminary S&P Global Manufacturing PMI came in positive, but S&P Global Services PMI (12:15) came in at 47.0, down from 52.3. Sam Lau will be looking for the next ISM manufacturing and services PMI to see if those series confirm or diverge from the S&P Global Services PMI.


The week of July 25-29 (14:58), the hosts note, will be a busy one with the Federal Open Market Committee meeting, where the FOMC is expected to raise the Federal Funds target rate by 75 basis points, and Jerome Powell’s news conference on Wednesday; the first estimate of second quarter GDP due Thursday; and the Employment Cost Index on Friday.

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 (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, 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.