Tags: jeff sherman | jeff gundlach | doubleline | federal reserve

DoubleLine COO Sees Yields, Commodities Rising in 2018

By    |   Tuesday, 23 January 2018 03:43 PM

Jeff Sherman, the COO at Jeff Gundlach's DoubleLine Capital, said bond yields and commodity prices are likely to rise this year as the global economy including the U.S. grows.

"You're talking about a synchronized global growth story, which portends higher rates," Sherman said on cable channel CNBC. "What you have is just an upward move across the entire Treasury curve, the five-year as well. The one part of the Treasury market that's holding out for this long-term bond bull market is the 30-year. It does look like rates will push higher as we continue to get more growth."

The benchmark 10-year yield is at the highest level since July 2014, which also means mortgage rates are facing upward pressure. Wall Street economists forecast on average that the Federal Reserve will raise interest rates three times this year from the current target of 1.25 percent to 1.5 percent.

Commodity prices will rise with economic growth and a weaker U.S. dollar, Sherman said.

"We've seen investors start to really talk about commodities in their portfolios. From a demand perspective this global growth story is very accretive for commodities," Sherman said.

Oil may rise with greater demand and production restraints.

"There's a lot of things that say commodities could have another leg upward," he said. "Historically, commodities have been a very good late-business-cycle asset class, because you get this last push, you get a lot of leverage in the system, you get a lot of credit out there and so you get this last boom that really resonates with the commodities market. We think that commodities are one of the better investment vehicles or at least have the potential for that in 2018."

Sherman’s forecast echoes Gundlach’s. The billionaire bond fund manager this month said commodities may be one of the best investments this year as they surge during the late phase of the economic cycle.

“Commodities will outperform in 2018,” Gundlach said during his annual ‘Just Markets’ webcast, which has his outlook for the coming year. “Commodities always rally sharply — much more sharply than they have so far — late in the business cycle as we lead into a recession.”

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Jeff Sherman, the COO at Jeff Gundlach's DoubleLine Capital, said bond yields and commodity prices are likely to rise this year as the global economy including the U.S. grows.
jeff sherman, jeff gundlach, doubleline, federal reserve
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2018-43-23
Tuesday, 23 January 2018 03:43 PM
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