[ad_1]
Bloomberg
For investors looking for a point of inflection in the bond market, that's all.
Jeff Gundlach, chief executive of Doubleline Capital, said on Thursday that US Treasury yields would likely rise and investors should adjust accordingly.
The so-called king of bonds said in an interview with CNN that the 10-year yield
TMUBMUSD10Y, + 0.33%
could reach 3.5% and 30 years
TMUBMUSD30Y, + 0.07%
could reach 4%, which could hurt companies that are sensitive to higher rates, such as car manufacturers.
In one tweet Last month, Gundlach predicted that the 30-year Treasury yield closing above 3.25% for two days in a row would mean a "game changer," he said on Thursday.
Two consecutive closures greater than 3.25% = evasion of the multi-year base of the head and shoulders. The last man standing is down. 7/16 was indeed the low rate.
– Jeffrey Gundlach (@TruthGundlach) October 4, 2018
His prophecy is fulfilled. According to FactSet, the 30-year Treasury yield closed at 3,357% Thursday after rising to 3,316% on Wednesday.
The 30-year yield "definitely exceeded a multi-year base that should, over time, lead us to significantly higher yields," Gundlach told Reuters. "In addition, the curve is slightly accentuated in this escape, which is another sign that the situation has changed."
Yields rose sharply this week thanks to solid economic data that supports the widely held view that the Federal Reserve will maintain its bellicose bias to prevent a possible overheating of the economy.
Last week, the Fed raised the benchmark interest rate for the third time this year and foreshadowed further tightening by the end of 2018 and three further increases in 2019.
While financial markets generally provided higher rates, the pace of the rise discomforted some investors, resulting in a sell-off in the stock market.
SPX, -0.82%
.
Nevertheless, strategists have taken into account market fluctuations, noting that soaring rates resulted from a healthy economy and not a negative trend.
Lily: JPMorgan Strategist Urges Investors to Stay Optimistic, While Stocks Record the Worst Day of the Month
"We see this decision as a reaction to a very healthy economy. an economy that should support equities, "said John Bredemus, head of financial markets at Allianz Investment Management.
Provide essential information for the US trading day. Subscribe to the free MarketWatch Need to Know newsletter. Register here.
[ad_2]
Source link
