After reviewing market and macro news for the week of March 21-25, DoubleLine’s Jeff Mayberry and Samuel Lau answer a listener’s question on how quantitative tightening (QT) could impact the 10-year U.S. Treasury yield (19:41) as well as the TIPS market, in which the Federal Reserve has a large footprint. Jeff and Sam look back at previous QT periods and note the accelerated pace of plans for interest rate hikes and balance sheet reduction in 2022. After discussing a pair of alliterative QT events, the Taper Tantrum and Powell Pivot (24:18), the duo reviews hiking cycles in 1984 and 1994 that Fed Chair Jerome H. Powell says resulted in economic soft landings (29:21), with the lack of inflation a key factor both times. Jeff and Sam conclude the segment with a breakdown of QT’s possible impact on the TIPS market and breakevens (33:29).*
The week of March 21-25 delivered a lot of action in U.S. soccer as well as a risk-on sentiment in the markets (2:05). The S&P 500 had a strong week, Fixed Income Land observed some curve flattening (3:18), and while commodities stayed strong (6:22), the nickel market remained reined in (7:42). The past week was relatively light on macro news (9:42); next week’s macro numbers will include home prices, JOLTS data and nonfarm payrolls (40:14).
*The following previous episodes contain more information on this week’s topic:
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