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September 2, 2022 | Monday Morning Minutes

MMM Episode 81: A Month of Weaker Stocks, Volatile Bond Yields and a Dominant Dollar

In a survey of market returns for August, Jeff Mayberry and Samuel Lau (3:25) note a decline of 4% on the S&P 500, with energy up 2.6% and utilities up 50 basis points (bps) to diverge from the negative sectors. The Russell 1000 Value, down 2.98%, outperformed the Russell 1000 Growth, down 4.7%. Turning to the fixed income markets (6:44), they point out that the month’s rise in yields such as 61 bps on the two-year Treasury and 54 bps on the 10-year Treasury understated significant intramonth volatility, especially around Federal Reserve officials’ policy retreat at Jackson Hole, Wyoming. For example, the two-year-to-10-year spread inverted to as much as negative 50 bps before ending Aug. 31 at negative 30 bps.

Commodities managed to eke out a gain of 9 bps in August (10:55) amid the Dollar Index, which tracks the U.S. dollar against other developed market currencies, at its highest levels in over two decades. West Texas Intermediate crude oil front-futures were down 9% for the month. “Given some of the (economic) weakness and central bank tightening financial conditions,” Sam Lau says, “perhaps the commodity market is finally starting to succumb to some of the strength in the dollar.”

After reviewing the JOLTS job openings report, nonfarm payrolls, unemployment and the labor force participation rate (19:20), Jeff Mayberry says, “All eyes are on the CPI number that we get in a couple of weeks, but certainly there’s nothing from the labor force side that would cause the Fed any concern that they shouldn’t raise rates.”

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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.