DoubleLine Analyst Mark Kimbrough and Asset Allocation Strategist Ryan Kimmel on Nov. 13 scrutinize a stock market (0:10) demonstrating broad strength for the week. Meanwhile they note fixed income (4:03), with the exception of floating-rate debt, sold off on a “borderline disturbing” CPI for October and hawkish remarks ahead of that report by Federal Reserve Governor Christopher Waller. Looking beyond the week-to-week price moves, Mark and Ryan discern in the year-to-date returns leadership shifts. These have favored the equal-weight S&P 500’s outperformance over its market-cap-weighted cousin. Commodities weakened, led lower by industrial metals and energy.

The macro front (10:03) was dominated by the October CPI, which showed “broad-based reflation” and raised the odds of a 50-basis-point hike at the FOMC's Dec. 9 meeting. In the wake of the week’s bond selloff, the odds of a half-point move stood at about 10% by Friday. Ryan Kimmel also takes note of a widening of the federal budget gap “to $404 billion in October, up 42% from the same period last year. This is not encouraging for the sustainability for our fiscal trajectory.”

Hot purchasing manager reports raising growth and inflation expectations the week ended Sept. 25 explain, per DoubleLine’s Eric Dhall and Mark Kimbrough, a narrow tech-driven gain in the S&P 500 (1:04) and higher yields along the U.S. Treasury curve (4:27). Commodities (9:33) eased, led by lower energy prices on Midde East conflict hopes.

The week’s macro prints (13:31) were led by strong S&P purchasing manager readings in the manufacturing and especially services sectors, bringing in tow higher wage pressures and prices-paid inputs. The University of Michigan consumer sentiment survey found that durable-goods buying conditions improved on the perception purchases now would avoid higher prices in the future. Eric Dhall notes the Federal Reserve’s attention has shifted “to the inflation side of the dual mandate.”

Looking to the week ahead, Eric and Mark will be on the lookout for the JOLTS job-openings report for August (Tuesday); personal income and spending as well as PCE for August (Wednesday); ISM Manufacturing reporting and jobless claims for September (Thursday); and nonfarm payrolls and unemployment rate for September (Friday).

Fed Chairman Kevin Warsh burnished his tainted inflation-fighting reputation at Jackson Hole, Friday, ending an Aug. 24-28 week, note DoubleLine’s Jeff Mayberry and Mark Kimbrough, characterized by a positive S&P 500 (0:59) but with most sectors in the red. On the back of Warsh’s Jackson Hole speech, they note the yield curve flattened (3:29) and fed funds futures repriced the odds of a rate hike on Sept. 16 to 60% from 35%.

Among the week’s macro prints (9:10), Mark Kimbrough notes Personal Income in July rose 0.4%. “0.4% is usually the bogey I’m looking for on a monthly basis; that annualizes to 4.9%. In a world of 2% inflation, that looks good. But we’re living in a world of elevated inflation.” Looking ahead to Aug. 31-Sept. 4, Jeff and Mark will be especially on watch for labor stats on Friday, including August nonfarm payrolls.