The legendary fixed-income manager Jeffrey Gundlach, CEO of DoubleLine Capital, joined Tom Keene on Bloomberg TV’s Surveillance Midday to discuss Europe, alpha and possible Fed moves.
“There’s absolutely no reason to own any investment-grade bonds that are inside of three years, for sure, and maybe these days even five years is getting to that category because it just basically has no yield,” Gundlach (left) told Keene.
On Europe’s affect on mortgages and mortgage-backed securities:
“In the mortgage world you’re in the fixed-income world, and so you’re going to have price movement that moves along with fixed income and you’re trying to perform. But we’re using mortgages better than other bond sectors. So it’s tough now with treasuries at the long end on fire, and meanwhile junk bonds have been falling pretty much every day this week by a fair amount. So there’s a lot going on, and we have to think about that. The mortgage market, more than three-quarters of it, is Ginnie Mae and Fannie Mae and Freddie Mac. So that works like government debt, although it has the refinancing component that makes it more complicated. And then you’ve got the non-guaranteed mortgage market, which is over a trillion dollars. And that’s going to move around with credit. And people—people are not that focused right on the default risk of mortgages like they probably should be when you look at the high-yield bond market that’s getting kind of nervous.”
On his investing technique: