DoubleLine Capital CEO & CIO Jeffrey Gundlach is glad football season is back. And the Buffalo Bills fan used a bit of sports lingo (and a touch of drama) on his quarterly call with investors Thursday.
“This is a big, big moment,” the fixed-income specialist said. “Interest rates have bottomed. They may not rise in the near term…, but I think it’s the beginning of something. And you’re supposed to be defensive.”
(Gundlach will be speaking at Schwab Impact 2016 on Oct. 28 in a session titled, ‘Ending the Monetary Experiment.)
Gundlach pointed to a low for the 10-year Treasury rate that failed to hold in July and explained that this rate could hit or surpass 2% by year-end.
He gave a few reasons for this scenario. First, both presidential candidates have pointed to spending on infrastructure.
“This idea that fiscal stimulus may be coming seems to be getting sniffed out by the bond market,” the DoubleLine executive said, and with more government borrowing, investors could push for higher yields.
“How can rates rise?” he asked. “That’s how they can rise, and they’re sort of rising already.”
Gundlach also pointed to the Federal Reserve’s apparent desire to raise rates despite weak purchasing data in manufacturing and services, as well as slowing gross domestic product growth.