Fed Has to Put Up or Shut Up, Says DoubleLine's Sherman

Summary

DoubleLine Deputy CIO Jeffrey Sherman argues the Fed must hike rates to prove it is serious about last-mile inflation and to stabilize the bond market. He sees long-duration Treasuries as a falling knife at current yields, while favoring the front end and short-duration credit. He also discusses the global sovereign-debt selloff, hyperscaler credit spreads, and dismisses Treasury jawboning and buyback efforts as ineffective.

• Jeffrey Sherman calls on the Fed to hike rates and reverse prior risk-management cuts.
• He says inflation is broad, driven by tariffs, services, money velocity and a capex boom, not oil.
• He sees a global rejection of long-term developed sovereign debt, with US, Japanese and UK yields at highs.
• He says long-duration Treasuries are a falling knife and he is not a buyer until stabilization.
• He favors 2-year Treasuries and short-duration credit for attractive yields versus cash.
• He flags hyperscaler credit spreads widening modestly but not yet systemically.
• He dismisses Scott Bessent's jawboning and $6bn buyback as ineffective.
• He expects Fed voting dissents to matter more than the dot plot.