4:59 PM ET

Gundlach: Treasury Yields Depend On Italian, Spanish, French Yields

By Michael Aneiro

Following up his appearance on CNBC this morning, DoubleLine bond guru Jeffrey Gundlach hosted a webcast this afternoon and stuck to his themes that rates will hold steady for the rest of the year, while a more serious rise in rates might happen eventually but not for another several years.

Gundlach said ultra-low euro-zone bond yields continue to determine how high Treasury bond yields can rise.

The dollar seems to be in an undeniably strengthening trend, and that should keep tempting European and Japanese buyers to buy Treasuries, he says, adding that it is absolutely foolish to own currencies other than the U.S. dollar right now. If European bond yields remain low, it seems very hard to see why U.S. rates should move higher.

He said investors should watch Spanish, Italian, and French 10-year bond yields in particular, saying any rise there could portend a rise in U.S. yields. French yields  rising would be a definitive sign that something funny is happening that will no longer be a drag on U.S. yields, he says, saying that the French 10-year would have to rise above 1.75% (from 1.35% today) for the U.S. 10-year yield to get above 2.8%.

In the near term, he says U.S. 10-year yields could tick as high as 2.65%, based on a confluence of a heavy calendar of new corporate bond issuance and the threat of Scottish secession  from the U.K. pushing European yields higher. But for now, rates should hold steady here.

People who believe rates are about to go out of control could be right in the long term, but could be at least five years too early, he says, saying investors should target higher-yielding strategies with lower durations.

Sep 9, 2014

11:11 AM ET

Gundlach: Rates Will Remain Stable, I May Own Buffalo Bills

By Michael Aneiro

DoubleLine investor-in-chief Jeffrey Gundlach was just on CNBC in a typically wide-ranging interview, offering his opinion on everything from interest rates to the housing market to his possible involvement in buying the Buffalo Bills. Speaking about bonds, his main area of expertise, Gundlach says rates will hold steady for the rest of 2014.

I think bonds are going to remain fairly stable this year, Gundlach said, adding that the 10-year Treasury yield will continue to range between 2.2% and 2.8%.

I dont think Janet Yellen wants to raise interest rates, and I dont really think theres much of a reason to raise interest rates, he said, pointing to subpar U.S. GDP. GDP growth today is actually no different, slightly less than it was in 2012. And in 2012 nobody was talking about the economy being too strong or that interest rates needed to rise. In fact September 2012 was when we embarked on QE3, $85 billion of bond-buying per month. If the economy was too weak in 2012 to raise rates, and needed stimulus support. why is lower GDP today needing higher interest rates?

In terms of any longer-term rate rise, Gundlach said the idea that rates are going to get out of control on the upside is plausible, but not for another five years.

Gundlach reiterated his bearish call on homebuilder stocks, saying housing starts are mired in a structural downturn while any combination of rising home prices and rising rates is a horrible formula for home affordability.

As for the Buffalo Bills: Gundlach, who has reportedly been in talks to buy his hometown NFL team. wants the Bills to remain in Buffalo and said he may be involved when the team announces a new ownership group.

I may be involved, I may not be involved, he said. I wont be the majority owner but I may be involved in the ownership team.

Aug 6, 2014

10:52 AM ET

Gundlach Sees More Fed Support Needed In Gloomy 2020 Forecast FT

By Michael Aneiro

The Financial Times today features an interview with Jeffrey Gundlach. (subscription needed) in which the DoubleLine founder looks ahead to 2020 and paints a gloomy portrait of an economy that will still be coming to terms with the unintended consequences of todays easy-money central banking ways. The FTs Stephen Foley reports:

When a bond market maven says “interesting”, be scared. What is good for fixed income is rarely good for the economy as a whole, and Mr Gundlach has a whole list of interesting: a wall of high-yield debt that companies will need to refinance; soaring federal government deficits as baby-boomers drain social security and healthcare funds; ageing populations in China and other emerging markets; and the Federal Reserve’s Treasury holdings maturing, too.

His conclusion? By 2020, the Fed may well be resurrecting quantitative easing, its palliative for troubled markets.

“It seems like one of the consequences of this zero interest rate policy is you’ve pushed out the problem of refinancing, of rolling over, but you’ve really compounded the magnitude of it and it seems to be focused around the 2020s.”

Gundlach made a prescient and contrarian call earlier this year that interest rates would fall rather than rise, in 2014, which has helped his flagship fund, the DoubleLine Total Return Bond Fund  (DBLTX ), gain 4.84% this year to date, per Morningstar, beating the 4.00% return of the Barclays Aggregate index.

Gundlach aslso thinks the economy isnt nearly as healthy as some recent data would suggest. He says forecasters and equity markets will eventually stop clinging to the notion of robust, accelerating growth, and hints that he may have punched some pumpkins in his day:

They cling to the idea now, he says, “and then all of a sudden they won’t. It’s kind of like punching a pumpkin. It’s the same thing, the same thing, the same thing and then all of a sudden it all caves in. I would still be surprised to see full-year 2014 GDP exceed 2 per cent.”

Jul 11, 2014

11:46 AM ET

Gundlach Said To Be In Talks To Buy Buffalo Bills

By Michael Aneiro

Bond bigwig Jeffrey Gundlach is reportedly in talks to buy his hometown football team. Gundlach, who runs Los Angeles-based investment firm DoubleLine Capital. grew up in Buffalo and had expressed interest in buying the Buffalo Bills NFL franchise back in 2011. fresh off his acrimonious, litigious split with his former employer Trust Company of the West. The Buffalo News  reports  that Gundlach, whos had three years to further pad his coffers since his initial overture, has recently reached out to NFL Hall of Fame quarterback Jim Kelly, who led the Bills to four straight Super Bowls in the early 199os, losing all four. Tim Graham report s for the News :

One source familiar with the sales process and another in the banking industry say Gundlach not only is exploring a purchase, but also has approached Bills legend Jim Kelly about forming a group. Only two other prospective buyers, former Buffalo Sabres owner Tom Golisano and developer Donald Trump, have publicly declared their interest in buying the Bills. The Buffalo News first reported Sabres owner Terry Pegula has hired highly respected team broker Steve Greenberg to explore the possibility.

A DoubleLine spokesman told Barrons  today that the firm had no comment on the matter. Gundlach has previously said he’d keep the team in Buffalo and wants to see it win the championship that’s eluded the franchise so far.

May 5, 2014

Gundlach Sees Rising Odds Treasury Yields Hit New All-Time Low

By Michael Aneiro

DoubleLine bond guru Jeffery Gundlach followed up his appearance at the Ira Sohn Investment Conference with a segment on CNBC, in which he again made the case that Treasury yields could continue to move lower this year despite widespread expectations that theyll rise. Gundlach has been saying for a while that so many investors are short Treasuries that if yields keep moving lower, it could create a massive short squeeze that would drive rates lower still. (Many attribute  last Fridays sharp intraday move lower in rates to similar market forces). Gundlach says that entering 2014, he thought there was a 10% chance that Treasury yields would fall back to their all-time lows set in July 2012 (1.39% 10-year yield) sometime this year. Now he upgrades the odds of that happening to 30%.

It seems to be another year of high expectations dashed. If there’s investor demand for Treasuries at a 2.5% yield, I think there will be a massive Treasury rally. Treasury yields look relatively high versus Europe, versus Japan, versus credit Treasuries are under-owned and there are a lot of short positions against Treasuries in unconstrained funds and ETFs. I think’s there’s a 30% chance that Treasury yields will go below the lows seen in July 2012, and I used to think it was a 10% chance. Its because of the massive short positioning in Treasuries.