DoubleLine CEO Jeffrey Gundlach says there’s some upside potential for gold and good support for a strong U.S. dollar. He shared these views during his “Penny for Your Thoughts” webinar in mid-June.
“Calls for much higher Treasuries yields are premature once again,” he remarked. The trading range is likely to stay between 2.2% and 2.8%, the fixed income expert says. “We are now at the midpoint of the range, so it’s not a bad time to think about bonds.”
In the first half of 2014, U.S. Treasuries made it to 2.44% and then moved up to 2.64%. “Pension plans are taking advantage of big equity gains to move from stocks to bonds,” Gundlach explained, “and that cyclical movement is having an impact.”
The bond-shop CEO believes interest rates of 4% are not expected until 2020. “That’s what the market is saying,” he explained on the call. Why are rates so low? “There’s a big short position in Treasuries” held by speculators, Gundlach said.
Of the $16.8 trillion of Treasuries, the Federal Reserve holds about $2.1 trillion, while the Social Security system has $2.6 trillion. The Chinese own $1.3 trillion of Treasuries, but other countries have double that amount.
As for the U.S. housing industry, new home-buying will likely “be much less than previously thought,” said Gundlach.