Market Swings Trading amid the Fog of War (E254)

At the end of a March 9-13 week whipsawed by the fog of war, DoubleLine Portfolio Manager Eric Dhall and Macro Asset Allocation Strategist Ryan Kimmel survey down but not (yet) correcting stocks, higher yields across the curve led by the front end on inflation jitters and energy surging amid rumor-fed price swings. In forex markets, they survey the dollar’s wartime dominance and the yen crushed on Japan and its neighbors’ vulnerability to the interruption liquified natural gas shipments through the Strait of Hormuz. Eric and Ryan cover the week’s macro prints, including the February CPI and January PCE Price Deflator, while cautioning against taking too much stock such rearview readings while the transience or permanence of the present energy shock remains a big unknown. Fed funds futures earlier in the week had priced in zero rate cuts for the remainder of 2026 before ending the week forecasting a single cut. Ryan fields a listener’s question on the revision-plagued nonfarm payrolls series. Looking to the week ahead, macro prints such as the February PPI remain subject to the same potential obsolescence affecting previous releases. Topping Eric and Ryan’s radar screen will be the Federal Open Market Committee meeting and Jerome Powell news conference on Wednesday. “There’s naturally not going to be a cut,” Eric notes. “But there’s going to be a lot of parsing of the language to see the setup for the new Fed chair” after Powell’s term in that seat ends in May and Kevin Warsh presumably takes over as his Senate-confirmed successor.

DoubleLine Portfolio Manager Eric Dhall and Analyst Mark Kimbrough cover a March 2-6 market week rocked by the Feb. 28 outbreak of war in the Middle East, related energy-supply shocks, private credit losses and labor weakness in February. Equities (0:31) sold off across the board with energy the only positive sector for the week with a mere 1% gain. Fixed income (2:52) saw Treasury yields rise across the curve with the exception of a rally in the 3-month T-bill. Bank loans (4:32) were a lone positive note in the spread sectors. Commodity indexes (6:04) surged higher, led by a 25% gain in the energy complex with spikes in oil distillates, notably a 50% surge in diesel for delivery to Europe.   On the macro front (11:16), albeit reflecting activity prior to global economy-roiling events in Iran and the Persian Gulf, ISM goods and services reports were solidly expansionary for February. Import prices ex-petroleum accelerated higher in January. Nonfarm payrolls suffered significant losses in February, even after adjusting for a strike affecting healthcare workers that has since been resolved. The week ahead will include the February CPI (Wednesday) and personal income & spending and PCE for January (Friday).

DoubleLine Portfolio Manager Jeff Mayberry and Fixed Income Allocation Strategist Ryan Kimmel review February performance during the final market week of the month ended Feb. 27. The S&P 500 finished the month down only 1% despite all the negative headlines and volatility. While tech and financials struggled, equities experienced wide dispersion, with the S&P 500 Equal Weight Index marking its biggest outperformance versus its market-weighted sibling since the GFC era. Also of note, a Cetrini paper on a dark AI future for the economy stoked tech sector concerns. Over in fixed income (6:21), the Agg turned in a nice month while a new bankruptcy continued to mount about private credit. Commodities were up on the week and month (10:55), with oil prices impacted by the Iran situation, and Bitcoin (12:31) may have found a floor. It was a light week in Macro Land (13:19), with updates on consumer sentiment; employment; and inflation, with these numbers not going the Fed’s way. Next week’s releases (18:05) will include ISM PMI prints as well as January retail numbers.

DoubleLine Macro Asset Allocation Strategist Ryan Kimmel and Analyst Mark Kimbrough note a rotation (0:05) in favor of communications services and financials as well as industrials in the stock market for the week ended Feb. 20. The previous week’s winners – Old Economy sectors: utilities, materials, consumer staples and real estate – were down this week. In fixed income (4:09), investment grade sectors faced the headwind of a slight rise in yields across the Treasury curve while high yield and bank loans had positive returns. The long bond led yield-curve steepening Friday on the U.S. Supreme Court’s decision to strike down President Trump’s tariffs. Commodities (6:41) moved higher with crude oil up 6%. Among the week’s macro news (8:32), Ryan Kimmel sees positive signs for U.S. manufacturing; but headline and core PCE moving higher in December, decelerating wage and salary growth; and more signs of a K-shaped economy in the University of Michigan consumer sentiment survey for February. Mark Kimbrough spies a “hawkish tilt” in the minutes of the Jan. 28 Federal Open Market Committee meeting. Looking ahead (20:41) to the week of Feb. 23-27, Ryan and Mark will be on the lookout for home price appreciation indexes, the Conference Board’s consumer confidence report, jobless claims and the producer price index for January.

Under the hood of broad stock indexes (00:19) for the week ended Feb. 13, Macro Asset Allocation Strategist Ryan Kimmel and Analyst Mark Kimbrough see ongoing rotation from knowledge-economy sectors such as financials, communication services and tech as well as consumer discretionary into old-economy sectors such as utilities, materials, real estate, consumer staples and energy. These money flows largely continued the stock-market leadership of the prior week. Ryan and Mark also note a change of the guard, year-to-date, in investment styles with equal-weighted large caps outperforming market-weighted large caps and value outperforming growth. In fixed income (4:06), bull curve-flattening lifted the Bloomberg US Aggregate Bond Index, with Agency mortgage-backed securities outperforming investment grade corporates and Treasuries. In risky credits, emerging markets debt kept up with Agency MBS. Commodities (6:54) weakened, while in precious metals, silver stabilized and gold recovered above $5,000 per troy ounce. A heavy week for macro news (8:22), retail goods sales came in somewhat weak. Encouraging news on inflation arrived with the Employment Cost Index for 4Q2025 and the Consumer Price Index for January. Nonfarm payrolls for the month came in unusually strong versus expectations. Mark cautions that the bulk of the new hires were concentrated in healthcare and social assistance, and Ryan is taking a wait-and-see attitude given this data series’ history of downward revisions. Looking ahead to the abbreviated holiday week (22:09) of Feb. 17-20, Ryan and Mark will be on the lookout for the Wednesday release of minutes of the Jan. 28 meeting of the Federal Open Market Committee (to see whether there is corroboration for a reprise in U.S. manufacturing) and Friday’s release of the Personal Consumption Expenditure Deflator report for December.

For the week ended Feb. 6, DoubleLine Portfolio Manager Eric Dhall and Analyst Mark Kimbrough survey big industry and investment-style dispersions in the stock market (0:43), including winners and losers within tech; more underlying volatility in bonds than meets the eye (5:26); and commodities roiled by volatility as well as dispersion (8:31). They also take note of a massive ongoing decoupling of gold and the “purported digital gold,” bitcoin, that Eric says is putting both mid-tier bitcoin miners and crypto believers to the test. On the macro front (12:41), the brief government shutdown delayed the Bureau of Labor Statistics’ January payroll and unemployment reports to Feb. 11. Mark finds expansionary signs in the ISM manufacturing and services reports for January, while cautioning not to read too much in one month’s data. Looking ahead (19:01) to the week of Feb. 9-13, Eric and Mark will be on the lookout for the January labor reports and consumer price index.

DoubleLine Fixed Income Asset Allocation Strategist Ryan Kimmel and Analyst Mark Kimbrough review changing industry leadership in the stock market (0:18) for the week ended Jan. 30. The Bloomberg Aggregate squeaked through with gains (3:39) despite higher rates while risky fixed income sectors turned negative. Commodities (6:50) moved higher, driven almost entirely by energy. The forex markets (9:30) witnessed coordinated intervention by the U.S. and Japan to stave off more yen weakness. The week’s macro news (10:58) was dominated by the Federal Open Market Committee, which Wednesday stayed on hold, followed by Fed Chair Jerome Powell’s news conference, and President Trump’s nomination of Kevin Warsh to succeed Powell as head of the Federal Reserve. For next week’s macro calendar (19:09), Ryan and Mark will be especially interested to see forthcoming labor-market benchmark revisions by the Bureau of Labor Statistics, perhaps even an overhaul of the birth-death model.

DoubleLine Portfolio Manager Jeff Mayberry and Fixed Income Allocation Strategist Ryan Kimmel review the week ended Jan. 23. They survey a mixed bag for stocks (0:31), with the S&P 500 lower on tech and energy and materials the winners; fixed income (2:06) slightly negative on spillover effects from the selloff in Japanese government bonds and rates up across the Treasury curve; and commodities (3:40) surging higher on energy and precious metals. The macro front (5:43) brought the shutdown-delayed release of benign readings, to be taken “with a big grain of salt,” on the PCE Deflator for October and November; and a weakening in personal income, resulting in a declining personal savings rate. Topping the week ahead (13:36) will be the Federal Open Market Committee Meeting and Fed Chairman Jerome Powell’s news conference on Jan. 28. Fed funds futures price in a mere 3% probability of a rate cut at the FOMC meeting, rising to only 33% by the end of Powell’s mandate.

DoubleLine Portfolio Manager Eric Dhall and Analyst Mark Kimbrough survey the market week ended Jan. 16. They observe dispersion among stock-market sectors (0:50), with Real Estate climbing on President Trump pressuring the Government Sponsored Enterprises to buy more mortgage securities in an effort to lower mortgage rates. A mixed bag also prevailed in fixed income (5:00), with Treasury yields in the belly of the curve moving out 5-6 basis points while non-traditional credit sectors still provided positive returns. Commodities (6:52) tacked on gains as crude oil responded to risks of U.S. military strikes and Iranian threats of retaliation. Interestingly, both the dollar (8:46) and gold were up on the week and year-to-date. In the week’s macro news (10:26), the December consumer price index, notes Mark Kimbrough, offered “some clues that core good inflation is moderating.” For the Jan. 19-23 week, topping the billboard will be the November print of the PCE Index, the Federal Reserve’s preferred inflation indicator.

DoubleLine Portfolio Manager Jeff Mayberry and Fixed Income Allocation Strategist Ryan Kimmel review a positive 2025 for stocks, bonds and commodities (1:22), with outperformance in European and emerging market equities. After scanning the first YTD returns for the New Year (5:46), they dive into a data-heavy macro week (9:02) ended Jan. 9. Topping the week’s prints are mixed December labor readings and trade-deficit narrowing that sufficed to raise the Atlanta Fed’s GDPNow annualized estimate for 4Q2025 to 5.4% from 2.9%. A review of fed fund futures pricing (17:06) indicates a Fed standing pat until odds for a rate cut reach to a coin flip on April 29, presumably Jerome Powell’s last day to preside over the Federal Open Market Committee. Looking to the week ahead (17:55), topping Jeff and Ryan’s watch list will be the December CPI report (due Tuesday).