Tags: Gundlach | floor | 10-year | Treasury

DoubleLine's Gundlach: 2.2 Percent Should Represent Floor for 10-Year Treasury Yield

By    |   Tuesday, 14 October 2014 02:30 PM

The 10-year Treasury yield has swooned in recent days amid concern about sluggish global economic growth, briefly falling to 2.15 percent Thursday.

But bond-investing star Jeffrey Gundlach, CEO of Doubleline Capital, thinks the move has run its course. He told CNBC that 2.2 percent will likely constitute the floor for the 10-year yield for some time.

Sentiment has been driving rates more than fundamentals, Gundlach said, noting that most recent U.S. economic data have been solid. For example, non-farm payrolls rose a larger-than-expected 288,000 in September and unemployment fell to a six-year low of 5.9 percent.

To be sure, if the 10-year yield does fall below 2.2 percent, that would prevent the Federal Reserve from raising interest rates because of the deflationary risk, Gundlach said.

Last month, he predicted that the 10-year yield would remain in a range of 2.2 to 2.8 percent for the remainder of the year.

Meanwhile, he thinks the record highs reached by the S&P 500 index and the Dow Jones Industrial Average Sept. 19 will prove to be the market peaks for the year. And he believes the dollar will keep rising.

In the Treasury market now, the focus remains on economic weakness overseas.

"There is some fear that something else will weaken in terms of economic growth around the world," Aaron Kohli, an interest-rate strategist BNP Paribas, told Bloomberg. "When the Fed attempts to remove liquidity from the system, you start to see the cracks appear."

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The 10-year Treasury yield has swooned in recent days amid concern about sluggish global economic growth, briefly falling to 2.15 percent Thursday.
Gundlach, floor, 10-year, Treasury
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2014-30-14
Tuesday, 14 October 2014 02:30 PM
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