In a new research paper combining macroeconomic data with high frequency asset-backed securities (ABS) data, DoubleLine Portfolio Manager Andrew Hsu and ABS Trader Michael Fine find a persistently resilient U.S. consumer.

The research paper, "The State of the U.S. Consumer Through the Lens of Asset-Backed Securities," can be accessed here: https://doubleline.com/wp-content/uploads/Consumer-ABS-and-the-US-Consumer_Hsu_Fine_September-2024.pdf 

Consumer resilience, Messrs. Hsu and Fine write, "is likely fueled by the strength of the residential mortgage market, a robust labor market and the excess savings accumulated during the pandemic." Notwithstanding that strength, they note that "potential risks to the consumer persist, including the depletion of these savings, wage stagnation, a recent rise in unemployment and ongoing high consumer prices, notwithstanding cooling in the year-over-year rate of inflation."

Amid that conjuncture of consumer resilience and economic risk, the authors report that DoubleLine continues "to find attractive relative value in select areas of the ABS consumer market. While prepayments, defaults and loss severities require close monitoring, they all remain within reasonable historical average moving bands."

Andrew Hsu, CFA, is a Portfolio Manager for the DoubleLine Total Return and ABS/Infrastructure Income strategies. Mr. Hsu is a permanent member of the Fixed Income Asset Allocation and Structured Products committees. Prior to that, he was responsible for analysis and trading of structured products, where his focus included residential RMBS and ABS transactions. Mr. Hsu's responsibilities have also included structuring and negotiating terms on new-issue transactions and forming strategic partnerships with issuing entities in order to participate in key transactions.

Michael Fine is a Trader on DoubleLine's ABS team. Previously, he was an Analyst on the Risk Management team focusing on credit research and trading. Prior to DoubleLine, Mr. Fine was with Western Asset Management as an Analyst performing structured credit research and providing portfolio analysis on multisector fixed-income portfolios. Prior to that, he was member of the Analytics team.