Channel 11: Judgement Day

Image

DoubleLine Portfolio Manager Ken Shinoda returns with his latest Channel 11 update, Judgement Day, in a nod to the AI dominance of markets this year. On the surface, the S&P 500 Index looks like it has gone sideways, but underneath there has been real rotation. The Mag 7 are roughly flat since last October, while equal weight, small caps and international markets have quietly caught up. While nearly every major index and commodity has risen double digits on the year, led by energy’s surge amid the Middle East conflict, Mr. Shinoda flags a growing divergence within corporate credit worth watching: Several investment grade hyperscaler bonds, including those of Oracle and SpaceX, are trading at spreads wider than the high yield BB index, suggesting the market sees more leverage risk in these names than their official ratings reflect.

On rates, a more hawkish tone out of Jackson Hole has pushed the probability of a federal funds rate hike this month back above 60%, driving the two-year U.S. Treasury yield up nearly 100 basis points on the year and the 10-year toward its highs, retesting the psychologically important 4.75% to 5% level. Mr. Shinoda continues to see this as a global phenomenon rather than a U.S.-specific story, given similar pressure building in long-term rates abroad. With credit spreads remaining broadly resilient and rates the primary driver of fixed income returns this year, he continues to favor short duration and securitized credit, seeing little reason to chase equities into a seasonally weaker September without some pullback first.

READ MORE FROM DOUBLELINE CAPITAL

The views and forecasts expressed in any materials on this website are as of the date indicated, are subject to change without notice, may not come to pass and do not represent a recommendation or offer of any particular security, strategy, or investment. DoubleLine has no obligation to provide revised assessments in the event of changed circumstances.

By using this website and/or sending DoubleLine any information via this website, you acknowledge that any personal information you provide to us will be subject to our Privacy Policy, which has been designed to comply with applicable laws in the various jurisdictions in which DoubleLine does business. If you have reached out to us on an unsolicited basis from outside the United States, local data privacy regulations may not apply to the information that you provide.

DoubleLine | 2002 N. Tampa Street, Suite 200 | Tampa, FL 33602 | (813) 791-7333

© DoubleLine. All Rights Reserved.

The InsuranceAUM podcast is available on

Share this post

Contacts

---

DoubleLine Capital LP

Image

DoubleLine has been managing money for insurers since its inception in 2009. The firm's focus on securitized fixed income and risk management positions it well to manage money for insurers. The firm offers an array of fixed income strategies including dedicated ABS, private ABF, CLOs, infrastructure debt, non-QM, commercial and residential loans, multi-sector fixed income and EM. We understand that the needs of each insurer can vary, and our insurance team is focused on providing our clients with unparalleled access to the investment team and creating custom solutions to meet their distinctive objectives. DoubleLine wants to be your fixed income partner.
 

Paul Schroeder, CFA   
Relationship Manager- Insurance  
paul.schroeder@doubleline.com
Direct: 213-372-3123
Main: 813-791-7333
 

View the contributor page