Fairly Choppy Markets, Light Macro Heading Into Fed Day (E282)

DoubleLine Portfolio Manager Jeff Mayberry and Analyst Mark Kimbrough discuss the market week ended Oct. 23, including what could end up being a mini-run for tech stocks and a bond market acting as a safe haven (3:42), with commodities (6:38) rounding out what was a volatile week across asset classes that ended relatively flat all around. It was a light week in Macro Land leading into next week’s FOMC meeting, including some unsurprising labor numbers (9:20) and another firm S&P Global U.S. PMI report (10:10) in which inflation is a noticeable issue. Aside from Fed Day, which the market does not expect to deliver a rate hike, next week (15:39) will bring durable goods and home price data as well as the latest PCE print.

Portfolio Manager Eric Dhall and Allocation Strategist Ryan Kimmel survey improved stock breadth even as tech led the S&P 500 lower (1:06) the week ended Oct. 16. Bonds (5:11) enjoyed bull-flattening as short squeezes took hold despite hotter-than-expected inflation. While Bloomberg Commodities Index gained, Eric calls the move a “one-trick pony” in the form of headline-juiced energy prices. Macro news (11:15) was dominated by September core CPI and PPI reports which registered broad, hotter-than-expected inflation, outside factors attributable to the energy complex; retail sales came in more mixed.

Even without tech to liven up the party, stocks staged a broad rally on the S&P 500 (0:42) for the week ended Oct. 9, DoubleLine Portfolio Manager Eric Dhall and Analyst Mark Kimbrough observe. After four weeks of rising yields, bonds (3:01) at last caught a bid. Commodities ended higher (4:55), led by energy on the Middle East conflict. Eric advises being on the lookout for distillate supply interruptions in the wake of Hurricane Isaias’ imminent forecast landfall on the Gulf Coast.   For the week’s macro news (10:14), ISM services for September arrived in line with expansionary expectations, with an inflationary note from the survey’s prices-paid component. FOMC minutes indicated Fed officials leaning toward another fed funds hike in 2026, although the futures market is pricing in a Fed on hold at the rate-setting body’s Oct. 28 meeting. Looking to the week ahead (18:40), all eyes will be peeled for the CPI and PPI reports for September (Wednesday and Thursday, respectively).

DoubleLine Portfolio Manager Jeff Mayberry and Asset Allocation Strategist Ryan Kimmel review the month of September in markets and the week’s macro news. The S&P 500 (1:01) gave ground in September across all sectors except for gains in tech and a flat communications services sector. Fixed income (4:57) fell to rising rates across the curve with bank loans, thanks to their floating-rate mechanism, the lone holdout. Jeff and Ryan also take note of spread-widening in riskier corporate credit, with higher rates possibly jeopardizing refinancing prospects for some companies. Commodities (9:58) rose, led by energy, amid some of the closest correlation in years between energy prices and interest rates. Among the week’s macro prints (13:00), Ryan noted softer-than-expected job openings in August and softening consumer confidence in September, concerning prices-paid in the ISM manufacturing report for September and a weaker-than-expected nonfarm payroll creations in the month.

Hot purchasing manager reports raising growth and inflation expectations the week ended Sept. 25 explain, per DoubleLine’s Eric Dhall and Mark Kimbrough, a narrow tech-driven gain in the S&P 500 (1:04) and higher yields along the U.S. Treasury curve (4:27). Commodities (9:33) eased, led by lower energy prices on Midde East conflict hopes.   The week’s macro prints (13:31) were led by strong S&P purchasing manager readings in the manufacturing and especially services sectors, bringing in tow higher wage pressures and prices-paid inputs. The University of Michigan consumer sentiment survey found that durable-goods buying conditions improved on the perception purchases now would avoid higher prices in the future. Eric Dhall notes the Federal Reserve’s attention has shifted “to the inflation side of the dual mandate.”   Looking to the week ahead, Eric and Mark will be on the lookout for the JOLTS job-openings report for August (Tuesday); personal income and spending as well as PCE for August (Wednesday); ISM Manufacturing reporting and jobless claims for September (Thursday); and nonfarm payrolls and unemployment rate for September (Friday).

DoubleLine Analyst Mark Kimbrough and Asset Allocation Strategist Ryan Kimmel recap the market week ended Sept. 18, including the modest extension of a downturn in stocks. Fixed income was basically flat on the week, according to the Agg, and rates experienced a bear flattener (3:11). Commodities were also flattish but still way up year-to-date (6:26). The big macro news of the week was Wednesday’s FOMC meeting, which brought the first rate hike since 2023 (10:28). Messrs. Kimbrough and Kimmel note that while the markets were prepared for the hike, what was surprising was the extent of hawkish support for the move and possible future hikes this year and next. Other economic news included stronger than expected August retail sales and import prices. Next week will be a light week of data drops, including PMI and durable goods prints (20:53).

DoubleLine Portfolio Manager Jeff Mayberry and Analyst Mark Kimbrough review a holiday-shortened week (Sept. 8-11) that delivered a mixed bag for markets: S&P 500 stocks were mostly down but not by much (00:53); bonds had an exciting week as the U.S. Treasury Department’s buyback exceeded its initially discussed goal of $4 billion (3:05); and commodities climbed on higher energy prices, including record diesel prices at the pump (6:09). Over in Macro Land, the main attraction was Inflation Week (7:34). Messrs. Mayberry and Kimbrough break down new prints for the Producer Price Index (8:55) and Consumer Price Index (11:02), which contained no surprises but boosted the odds of a hike at the FOMC meeting, next week’s main event (16:15).

Portfolio Manager Jeff Mayberry and Asset Allocation Strategist Ryan Kimmel on Sept. 4 survey a week ended with a flat S&P 500 (0.42) and, despite a slight rise in yields, a flat return on the Bloomberg Aggregate (3:02). Energy prices rose (6:10) on persistent hostilities in the Middle East. Their macro wrap-up (7:51) includes Friday’s report of stronger-than-expected payroll growth in August. “The market doesn’t seem to care about the labor market. By any stretch of the imagination, we’re at full employment,” Jeff Mayberry notes. “It’s not the jobs number or the unemployment rate that people worry about. It’s inflation.” The Labor Day-shortened week ahead will provide some of those answers with the August PPI on Thursday and CPI on Friday. “I’m going to be focused on Core CPI,” Ryan Kimmel says. “Waller basically said how he’s going to vote will depend on that number. Pretty remarkable, putting it all on one data print.”

Fed Chairman Kevin Warsh burnished his tainted inflation-fighting reputation at Jackson Hole, Friday, ending an Aug. 24-28 week, note DoubleLine’s Jeff Mayberry and Mark Kimbrough, characterized by a positive S&P 500 (0:59) but with most sectors in the red. On the back of Warsh’s Jackson Hole speech, they note the yield curve flattened (3:29) and fed funds futures repriced the odds of a rate hike on Sept. 16 to 60% from 35%. Among the week’s macro prints (9:10), Mark Kimbrough notes Personal Income in July rose 0.4%. “0.4% is usually the bogey I’m looking for on a monthly basis; that annualizes to 4.9%. In a world of 2% inflation, that looks good. But we’re living in a world of elevated inflation.” Looking ahead to Aug. 31-Sept. 4, Jeff and Mark will be especially on watch for labor stats on Friday, including August nonfarm payrolls.

After surveying a softening S&P 500 on weaker tech (0:26) for the week ended Aug. 21, DoubleLine Portfolio Manager Eric Dhall and Analyst Mark Kimbrough scrutinize bond pricing (1:53) that appeared less than impressed with Treasury Secretary Scott Besssent’s interventionism. Treasury’s limited buying at the long end, Eric Dhall remarks, stirred up volatility at that long end of the curve; nonetheless, term premia on government debt ended the week higher from shorter to longer tenors. That market verdict, coinciding with the national debt topping $40 trillion, he notes, left some investors spooked. Commodities (4:57) rose, led by energy, while gold and bitcoin rallied and the dollar weakened, moves which Eric attributes to the federal debt news and the worrisome Treasury intervention. Scrutinizing the week’s macro tea leaves (7:36), Mark Kimbrough sifts out an unusually strong “select-tech” contribution to industrial production, a positive but still-to-be-confirmed gain in services and manufacturing hiring, and signs in the FOMC minutes that members are continuing to “sit on their hands” with respect to the federal funds target rate. For Aug. 24-28, Eric and Mark will be especially on the lookout for PCE and personal income prints on Wednesday and whether Fed Chairman Kevin Warsh serves up something concrete or “gibberish” at his Jackson Hole speech scheduled 10 am ET Friday.