Jeffrey Sherman on the Treasury Rally, Fiscal Fears and Fading Foreign Demand | Bloomberg

In a Bloomberg TV Real Yield appearance, DoubleLine Deputy CIO Jeffrey Sherman discusses the Treasury rally as a flight-to-quality bid, saying the market looks oversold but fundamentals have not really changed. He explains that DoubleLine remains significantly underweight, if not outright short, the back end of the Treasury curve, and he critiques the Fed stance and the Treasury buyback program. He also covers fiscal fears, midterm gridlock, reconciliation risk and fading foreign demand for Treasuries.

1. Sherman sees an oversold Treasury market bouncing but no real change in fundamentals.
2. DoubleLine stays significantly underweight, if not outright short, the back end of the Treasury curve.
3. He says the Fed stance should be tighter than it is and calls the Treasury buyback program underwhelming.
4. He argues midterm gridlock is good for the deficit, sees risk in a rush to jam policy through reconciliation, and says foreign demand for Treasuries is fading.