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July 06, 2017 at 10:48 AM
“There you have it. U.S. ten year closes twice over 2.32%, and Bunds spike above 0.50%. Remember the ‘yields can never rise mantra’ one year ago?” DoubleLine Capital CEO Jeffrey Gundlach said on Twitter on Thursday.
Last week, the fixed income portfolio manager tweeted: “US 10-year yield above 200-day moving average, broke downtrendline from March. Critical level now 2.32%, probably coincides with 0.50% Bund.”
He also used Twitter to comment:
Two year US Treasury yield at an EIGHT YEAR high, AND above the 1Q 2008 rally pivot point. Very hard to find a bull case for that puppy!
— Jeffrey Gundlach (@TruthGundlach) June 30, 2017
U.S. Treasuries weakened on Thursday, along with European government bonds, due to weak demand for French debt, according to Bloomberg news. This contributed to lower equity prices. Plus, the U.S. dollar fell after an ADP report showed private employers hiring fewer workers than expected in June.
As of midday, the yield on 10-year Treasury notes had ticked up to 2.39% on Thursday, a jump of more than 25 basis points for the past nine trading days.
Meanwhile, the benchmark German bund yield rose to its highest level since January 2016.
Trouble Ahead?
Ten-year Treasury yields are likely to head “toward 3%” this year, Gundlach told Bloomberg via email. The bond king stressed an earlier view that there is “no justification for the divergent policies in the U.S. versus Europe given economic fundamentals.”
