DoubleLine

Since 1984, it has often been the case that when the Federal Reserve trims its key policy rate, U.S. Treasury bonds rally across the curve. A closer look reveals why: The Fed typically cuts policy rates during periods of economic or financial stress, conditions that usually support lower interest rates.

Since prediction markets began favoring a Trump victory in early October, the euro has depreciated against the U.S. dollar (USD). The threat of tariffs, higher yields, and fiscal expansionary policies have bolstered the USD against a broad range of currencies, with the euro being one of the weakest performers since the election. Trump’s current economic proposals resemble those from his first term, and global financial markets are reacting similarly to the 2016 election.

Over the past 15 years, large-cap U.S. equities have consistently outperformed their non-U.S. counterparts. The recent election victory of Trump has further accelerated this trend, with U.S. equities increasing by 2.5% since November 5, 2024, while the MSCI All-Country World Index (ACWI) excluding the USA index has declined by 3.3% during the same period. Whether this significant outperformance can continue remains an open question.

The U.S. election could signal a major change in the political, economic and financial landscape. With strong Republican performance, including Donald Trump’s presidential win and likely majorities in the U.S. Senate and House, the financial sector could be a significant beneficiary.

Robert Cohen, CFA, head of DoubleLine’s Global Developed Credit team, surveys relative values and expected returns for stocks and corporate bonds with CNBC’s Kelly Evans. Going into Trump 2.0, he sees corporate credit being competitive vs. stocks.

Although real GDP increased +2.8% QoQ annualized, the underlying data were robust, showing personal consumption growing at an annualized rate of +3.7%. Given that personal consumption accounts for nearly 70% of total GDP, can this significant driver of economic growth sustain its momentum in the medium term?

DoubleLine Portfolio Manager Bill Campbell and Client Portfolio Manager Chris Stegemann provide initial thoughts on the economic impact of the U.S. Election. DoubleLine CEO/CIO Jeffrey Gundlach called the election “consequential” and “thinks it is right to see the Trump victory as reducing the odds for near-term recession”. However, Mr. Gundlach “does not like the way [fiscal expansion] it is going to be accomplished because that will lead to the problem in long-term bonds.”

DoubleLine visited us last week in Chile. Jeffrey Sherman, Deputy Chief Investment Officer and Joel Pena, CFA, CAIA, Head of US Offshore, Latin America, and the Caribbean at DoubleLine joined Nicolas Fonseca, Head of Mutual Funds and María Luisa Arellano, Co-Head of Mutual Funds at HMC CAPITAL to discuss the economic outlook, U.S. elections, interest rate expectations, and efficient ways to exposing to US equity, among other topics. DoubleLine is an independent asset management firm founded in 2009 by CEO-CIO Jeffrey Gundlach. The firm offers a wide range of investment strategies, led by an experienced team of portfolio managers focused on active risk management, in-depth research, and innovative solutions. Thank you, DoubleLine, for the opportunity.

DoubleLine Portfolio Manager Ken Shinoda, CFA reviews the rally in equities and credits amid the rise in interest rates driven by expectations of more deficit spending, inflation and growth under the second presidency of Donald Trump. https://lnkd.in/gZ6G6ghe

Since prediction markets began favoring a Trump victory in early October, the euro has depreciated against the U.S. dollar (USD). The threat of tariffs, higher yields, and fiscal expansionary policies have bolstered the USD against a broad range of currencies, with the euro being one of the weakest performers since the election. Trump’s current economic proposals resemble those from his first term, and global financial markets are reacting similarly to the 2016 election.