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DoubleLine Podcasts

MMM Episode 55: Flight to Safety, Commodities on Fire, Index Rejiggering, ETF Liquidations

After reviewing macro news and markets for the week ended March 4, Jeff Mayberry and Samuel Lau try to bring some clarity to the chaos reigning over ETFs, indexes and other instruments with direct exposure to Russia (15:14). The war in Ukraine and dueling sanctions from Russia and the West have resulted in trading halts for specific securities by the New York Stock Exchange/Arca and by the Chicago Board Options Exchange, ETF liquidations and removal of Russian stocks from some of the diversified indexes that had included them. Surveying the week in markets (2:12), the cohosts note the S&P 500 declined 1.27% for the week, led lower by financials, which lost nearly 5%. Energy stocks rose 9% on fears of Russian supply disruptions. A flight to safety in Treasuries brought the 2- to 10-year yield spread closer to inversion with only 10s yielding only 25 bps more than 2s. That Russian supply shock story was in stark evidence in the commodities markets (6:50). The Bloomberg Commodity Index surged 13%, with the greatest strength in commodities dependent on Russian producers, including wheat, up 60% for the week. Looking ahead to the market week ending March 11 (29:03), Jeff and Sam note the consensus expectation of an 80 basis point month-over-month increase in the February Consumer Price Index, due Thursday March 10. That would mean a 7.9% year-over-year increase in the CPI. Barring an unforeseen inflationary shock, such as a hotter-than-expected CPI, Jeff Mayberry expects a 25-bp hike in the Federal Funds target rate when the Federal Open Market Committee convenes March 16.

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