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

• The 10-year Treasury yield hitting 5% reflects a global rejection of long-term sovereign debt, not just oil prices.
• Inflation is broad-based across manufacturing and services (prices paid, wages, tariffs), indicating the 'last mile' of inflation is proving difficult.
• The Fed needs to 'put up or shut up' by continuing rate hikes to show commitment to tempering inflation and reversing 'risk management cuts'.
• The front end of the yield curve (e.g., 2-year Treasury) offers attractive value for investors compared to cash, despite the overall 'falling knife' in the bond market.

Jeffrey Sherman of DoubleLine Capital argues that the Federal Reserve must continue hiking rates to address persistent, broad-based inflation, despite the 10-year Treasury yield hitting 5%. He believes the market needs clear, hawkish messaging from the Fed to restore stability and that the front end of the bond curve offers attractive value for investors.