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September 9, 2022 | Monday Morning Minutes

MMM Episode 82: Recession Indicators: Reliability and Readings Now

Bringing back their Topic of the Week, Jeff Mayberry and Samuel Lau review a raft of leading and coincident recession indicators (14:49), weighing their historical track records for predictive accuracy and noting what those gauges are saying now. The podcast hosts start with a survey (2:32) of the broad rally in U.S. equities for the week of Sept. 6-9, led by consumer discretionary and materials. Turning to fixed income (5:14), they note higher yields across the U.S. Treasury curve. That move helped push the investment-grade Bloomberg US Aggregate Bond Index to a negative weekly return of 60 basis points (bps) while riskier credits enjoyed positive returns of 2% for high yield corporate bonds, 1¼% for emerging markets debt and 1% for bank loans. The commodity market (7:05) put in a flattish negative 40 bps as measured by the Bloomberg Commodity Index.

In terms of the Sept. 6-9 week’s macro news (9:30), Jeff and Sam find most notable comments by Federal Reserve officials (10:46) before the Sept. 10 start of the blackout on Fedspeak ahead of the Sept. 21 rate-setting meeting of the Federal Open Market Committee. Jeff Mayberry ventures his interpretation of two comments by Fed Vice Chair Lael Brainard: that the Fed will tighten “as much as it takes” to reign in inflation and that gaps between policy actions and economic impacts pose a risk of overtightening. Interpretation: a 75 bp hike in the Federal Funds rate is coming Sept. 21, but perhaps Fed officials are already thinking about moderating hikes further out. The Federal Funds rate futures market, Samuel Lau observes, is pricing that key rate at 4% by the end of 2022.

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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.