Reverse on Tariffs, Curve Steeper, New Econ Data

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.