The market is still focused on Fed Chair Powell's speech, says DoubleLine's Jeffrey Sherman

Market Reaction to Fed Policies - The market initially reacted to news regarding the Federal Reserve with slight rate increases and dollar softness, but these movements reversed quickly, indicating a strong focus on potential Fed rate cuts [2][3] - The market is closely watching for signals from the Federal Reserve regarding potential rate cuts, particularly focusing on upcoming jobs and inflation data to guide the Fed's direction [5][6] - The bond market presents opportunities for various perspectives: the front end of the curve suggests rate cuts, while the back end reflects concerns about longer-term implications [7] Treasury Supply and Yields - Increased supply of treasuries, coupled with a potentially dovish Fed policy amid uncomfortable inflation levels (above the Fed's target), could lead the bond market to penalize Treasury issuance [9] - While the Treasury Secretary aims to lower the 10-year yield, market forces beyond their control are influencing it [9] - The Federal Reserve could attempt to control the back end of the curve through yield curve control and quantitative easing, but this may not be a great policy when market forces go in the opposite direction [10] Global Bond Market and Diversification - While the UK offers attractive yields, the rest of the world is converging towards the US, and the UK has its own fiscal issues [12][13] - Double Line has started to invest in local currency emerging market bonds, which offer yields around 7% without currency hedging, but with associated risks [14][16] - Developed world interest rates have been highly correlated, with Japan being the primary exception due to its reluctance to hike rates [18][19] BOJ and Global Sovereign Debt - The Bank of Japan (BOJ) is known for unpredictable policies and a lack of forward guidance, making Japanese Government Bonds (JGBs) less appealing [21] - High global sovereign debt levels and uncontrolled inflation suggest that rates, particularly at the back end, should be at or above current levels [22]