This page has been archived and commenting is disabled.

Gundlach Sees 10Y Treasury Testing 1.38% In 2015, Warns Of "Trouble Ahead"

Tyler Durden's picture




 

Having totally and utterly failed in 2014, the consensus for 2015 is once again higher rates (well they can't go any lower right?) with year-end 2015 expectations of 3.006% currently (having already plunged from over 3.65% in July). However, at the other end of the spectrum, DoubleLine's Jeff Gundlach told Barron's this weekend, the 10-yr Treasury yield may test the 2012 low of 1.38% as the Fed’s short-term rate increase is poised to trigger "surprising flattening" of yield curve.

 

Gundlach's forecast is 'very' anti-consensus...

 

as the curve has already flattened dramatically...

 

Following the 2002-06 path almost unbelievably perfectly...

 

Gundlach adds,

U.S. GDP growth for ’15, ’16 may not achieve 3%+ target as dollar strength hurts exporters, oil price drops cause deflationary pressure, job and spending cuts for energy industries, Gundlach said

 

USD appreciation will continue as growth stumbles in other parts of the world, making U.S. bonds “all the more attractive” for foreign buyers, Gundlach said

 

“Trouble lies ahead” for the euro zone; people in Europe “are obviously losing confidence and scared” as German yield turns negative, Gundlach told Barron’s

And here is Jeff Gundlach's latest chartapalooza presentation...

12-9-14 This Time - JEG Webcast Slides - FINAL for Distribution

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sat, 01/03/2015 - 22:42 | 5619658 Yen Cross
Yen Cross's picture

  That presents a conundrum. If Arnie thinks usd/jpy is going to 140.00 and at the same time thinks 10's are going to rise 5-6%? I need to put my thinking cap on.

 Nope, I think Arnie is slowly covering his Japan Asia exposure. Trends have a tendency to overshoot.

Sat, 01/03/2015 - 23:16 | 5619725 Richard Head
Richard Head's picture

Who is Arnie?

Sat, 01/03/2015 - 23:22 | 5619735 Yen Cross
Yen Cross's picture

 It my Nickname for this guy.

Jeffrey Gundlach

 

Sun, 01/04/2015 - 08:28 | 5620284 Gankfest
Gankfest's picture

@Yen Cross

You're an idiot... Like majority of the commenters on the internet. -_-

Sun, 01/04/2015 - 09:12 | 5620305 power steering
power steering's picture

Yawn. What about the latest on the hedge fund pedophiles? Hey they find that missing plane yet?

Sun, 01/04/2015 - 11:29 | 5620494 rccalhoun
rccalhoun's picture

and what are you gankfest?    (i dont need your answer)

Sun, 01/04/2015 - 17:25 | 5621342 Pool Shark
Pool Shark's picture

 

 

"Gundlach Sees 10Y Treasury Testing 1.38% In 2015"

Sounds about right.

Cash, Bonds, Gold...

 

Sun, 01/04/2015 - 02:18 | 5620031 tplink
tplink's picture

my co-worker's ex-wife makes $84 every hour on the internet . She has been laid off for six months but last month her check was $18827 just working on the internet for a few hours. go to this website... www.works3.com

Sun, 01/04/2015 - 02:58 | 5620084 lunaticfringe
lunaticfringe's picture

My co workers ex wife makes 300 an hour sucking cock. She's been laid off too but she's sucked every cock in the Hamptons over a six month time frame and says the tips are great. She netted a yacht and a place on the water in Puerto Rico.

Sun, 01/04/2015 - 09:18 | 5620311 power steering
power steering's picture

I am from the International Monetary Found and if you givee me your name, adress, phone number and bank route I can return the E10,000,000 your lost forgoten uncle Hamidou Bobuan bank presidant left you in Burkina Faso.

Sun, 01/04/2015 - 11:07 | 5620459 s2man
s2man's picture

I am running a hedge fund which is returning 40% annually.  Get in now before the Greater Fools.

Sun, 01/04/2015 - 10:49 | 5620433 CrimsonAvenger
CrimsonAvenger's picture

Sucks cock, and says the tips are great? That almost made me spit out my coffee laughing.

Sat, 01/03/2015 - 22:39 | 5619659 Wahooo
Wahooo's picture

Made good money doing the opposite of this guy, Cramer and Hussman. Still waiting for his S&P to hit 500 call from two years ago. These people talk their book and nothing more.

Sat, 01/03/2015 - 23:00 | 5619696 Philo Beddoe
Philo Beddoe's picture

Wanting to be correct is more important than wanting to make a profit. Ask me how I know. Maybe I can sell Herbalife to fund my retirement. 

Sat, 01/03/2015 - 23:07 | 5619711 Yen Cross
Yen Cross's picture

 Knowledge is Power Philo. Do your homework, get some exercise, and listen to your Wife. She's definitely your "better 1/2".

 Ohh regarding Herbalife. Apparently you missed the Ackman/Icahn saga?

 http://finance.yahoo.com/echarts?s=hlf+Interactive

Sat, 01/03/2015 - 23:21 | 5619730 Philo Beddoe
Philo Beddoe's picture

Take care, amigo.  All the best in 2015.  Gottah run.  

Sat, 01/03/2015 - 23:24 | 5619738 Yen Cross
Yen Cross's picture

  Gotta bury some more PM's?

Sat, 01/03/2015 - 23:27 | 5619752 Philo Beddoe
Philo Beddoe's picture

Yes, I am going to bury my precious member. Wish me luck! 

Sat, 01/03/2015 - 22:42 | 5619662 holdbuysell
holdbuysell's picture

<-- Agree with Gundlach

<-- Disagree wtih Gundlach

Sun, 01/04/2015 - 01:48 | 5619995 Carpenter1
Carpenter1's picture

The plan is coming into focus.

 

Juice the world up on QE, while of course saving the financial system. Create QE addicts everywhere, from day traders to emerging markets. Convince the hot money(this was 2010)that the recovery is in full swing via commodity prices surging. 

Liquidity galore, Malinvestments galore, then pull the plug. USD goes supernova while hot money expected it to tank, leading to crashing commodities prices and emerging markets in total chaos.

Bottom line. Crash the whole world's real economy while making the US the "safe haven." 

Last few acts are as follows: 

All hot money(whatever is keft)flows into the US, whether bonds, stocks, whatever. The global economy will be coming unglued at the time, so the US will seem like the only safe place to be. Once everyone's in the boat, the crash will happen in a nanosecond.

 

 

Sun, 01/04/2015 - 05:33 | 5620187 VegasBob
VegasBob's picture

Gundlach is too optimistic. Before this sorry mess collapses, I think the 30-year Treasury bond goes to 1.75%.  So the 10-year will probably be in the 1.2% range.

Sun, 01/04/2015 - 09:48 | 5620326 rbg81
rbg81's picture

Maybe I'm dense, but how is it possible for:

1.  The Fed to tighten (end QE and threaten to raise interest rates)

2.  US deficit spending to continue unabated

3.  The stock market to continue to go up

And, at the same time, have deflation (strong USD, commodity/oil crash) and recorrd low UST rates?

There is no doubt the whole game is rigged.  I've been saying this for years, and laugh my ass off whenever I hear Rick Santelli war of "bond vigilantes".  They don't exist anymore. UST rates will continue to trend down to zero and stay there.  Basically, it will allow the US Government to deficit spend for free and allow Americans (and increasingly illegals) to pump the world's economy while doing little in return (expect for breathing, shitting, and fucking inside the Imperium).  In short, the rest of the world is our bitch, turning tricks for dollars that are backed only by the perception of American value.  Rome had nothing on us. Hell, with NIRP, the US Gov may even MAKE $$ from deficit spending.  Such a deal!

Sun, 01/04/2015 - 10:03 | 5620363 new game
new game's picture

flight to security and likelyhood of rate rise is ____%.

answer= zero hedge,ha...

the malinvestment worldwide of 50 trillion all told will come to roost as values plumet due to credit/demand waning(unserviceable debt). simple, follow the bouncing ball, ha...

Sun, 01/04/2015 - 13:50 | 5620823 rbg81
rbg81's picture

The malinvestment is why we are now effectively communist.  If the Market can't rationallly price anything, then who decides the winners and losers?  Politicians and bureaucrats.  Of the two, I'd still choose the politicians because at least they still have to win elections.  The bureaucrats are accountable to no one.

Sun, 01/04/2015 - 10:56 | 5620447 game theory
game theory's picture

3. The stock market will keep going up as long as people keep buying shares.

2. The gov't is going to deficit spend as long as people keep buying bonds.

1. I doubt even the Fed knows what it will do.

China has no interest in being a bond vigilante. But why would anyone expect them to...they simply exported their crony-communism to the US (and our gov't workers love it).

The Fed can threaten to tighten all they want but the economy is a total wreck even with low unemployment.  Maybe we see more QE, further bond yield declines, and higher equities prices for all the same reasons we are seeing them now.  

Sun, 01/04/2015 - 11:47 | 5620512 chairman of the...
chairman of the bored's picture

The bond vigilantes have disappeared about 6 yrs now,been replaced by central banks worldwide.The large pensions and bond funds used to be able to launch an attack,no more...

Sat, 01/03/2015 - 22:44 | 5619669 alexmark2013
alexmark2013's picture
A Further Response on the Weakness in Modern Monetary Theory and Modern Economics  http://investmentwatchblog.com/a-further-response-on-the-weakness-in-modern-monetary-theory-and-modern-economics/
Sat, 01/03/2015 - 22:59 | 5619690 One And Only
One And Only's picture

What if the FED does something crazy? Like hike Fed Funds to 2% in January unexpectedly?

Just being anti consensus.

Sat, 01/03/2015 - 23:02 | 5619702 Philo Beddoe
Philo Beddoe's picture

The market would soar. 

Ok...great they raised rates...just to lower them. 

Sat, 01/03/2015 - 23:30 | 5619757 Yen Cross
Yen Cross's picture

 Rates aren't going to get raised. Look at Europe and Asia. Rates are going much lower.

 One figure I found intersting last week. The United States deficite was slated to increase by roughly 580 million dollars this year. (energy offsets) lmfao!  $800 million +final figure.

 This country is a disgrace! We've indebted our Grandchildren to eternal servitude.

Sun, 01/04/2015 - 00:03 | 5619838 odatruf
odatruf's picture

What if the Fed Funds rate does get raised to goose bank profits, but the Fed also shows up with the helicopter to every Treasury auction determined to bid low and often?

If the Fed can buy 60%, 70%,or 80% of all offered debt, why not 90% or every damn bit? And if they buy it all, they set the price and dictate the vig on the 18+ trillion.

JP Morgan tried to set and hold the market* in 1929, but he didn't have unlimited CTRL-P like our Madam at Marriner Eccles.

* it's quaint to even type the word.

Sun, 01/04/2015 - 01:56 | 5620006 Carpenter1
Carpenter1's picture

The FED will do what it said it will do. We're no longer playing the same "save the system" game. The next act has begun in this long winded play.

 

The USD is going supernova, which requires a rate hike. USD going ever higher will crash emerging markets and even western economies too. That's the game plan. real economy dies first while USD flies, last things to go are stock markets and USD. 

Sat, 01/03/2015 - 23:25 | 5619737 NoDebt
NoDebt's picture

The rainbow would collapse and turn all gray and stuff.

Yellen wouldn't have the stones to do more than 25 BPS per meeting, if she does anything at all.  I have a sandwich bet on this exact subject.  I'll likely lose.

 

Sun, 01/04/2015 - 02:39 | 5620067 Bunga Bunga
Bunga Bunga's picture

What if an airline operator would sell airline tickets for low fixed rates for the next 30 years and the plane leasing company does something crazy and hikes the variable lease rates? It would be suicide.

 

Sat, 01/03/2015 - 23:04 | 5619705 WTFUD
WTFUD's picture

' Trouble lies ahead ' for the euro zone ' . . . DU'H

There may be trouble ahead but where there's Draghi and Carney and Fixing & Bromance
Let's not face the music and dance.

Sat, 01/03/2015 - 23:05 | 5619707 Philo Beddoe
Philo Beddoe's picture

The only person who ever wanted to face the music was Hellen Keller. 

Sat, 01/03/2015 - 23:06 | 5619710 pitz
pitz's picture

The economy is falling off a cliff.  Despite the propoganda machine being in full swing.  No inflationary pressures, hence, no rate hikes.

Sun, 01/04/2015 - 02:00 | 5620012 Carpenter1
Carpenter1's picture

The economy is falling off a cliff, but don't presume the FED wants to save it. The rate hike will happen, not because the FED believes the economy is strong, they know full well the economy isn't strong.

 

Now is the time to bring down the global economy, so the rate hike will happen. 

Sun, 01/04/2015 - 10:14 | 5620377 new game
new game's picture

you are a fucking idiot, "but don't presume the FED wants to save it."

that is dumbest statement i've read in a long time! so, they like to loose money by crashing the econ. they have the most skin in the game. they are harvard/princeton dr degreed humans that think they are god, so therefor they miscalculate their god like precections due to the fact that they are not living in the real world. that is all you need to know, plus have faith in your masters, haha,...s/

Sat, 01/03/2015 - 23:13 | 5619719 GOSPLAN HERO
GOSPLAN HERO's picture

All power to the Soviet councils. 

Sat, 01/03/2015 - 23:26 | 5619746 Oldwood
Oldwood's picture

Interest on treasuries may be low but a zero yield on your cash is better than losing 50% in the stock market. We know everything is about timing and the fuckers at the top of this pyramid should have a handle on that better than anyone. So they are selling their stocks at an all time high and putting the money into cash and treasuries. The government and its crony banker/market shills will backstop currency and especially their own debts and let the muppets take it up the ass in the stock market. financial collapse suites their ends as long as they can retain power. Just a perspective based on no knowledge, only a general understanding of their nature.

Sat, 01/03/2015 - 23:37 | 5619765 yogibear
yogibear's picture

How about .75% for a 10 year?

That's where it's going. 

The lower it is the easier it is for the boys in DC to borrow and spend.

The Federal Reserve is getting it's dancing skittle pooping unicorns ready.

Sun, 01/04/2015 - 02:33 | 5620062 FreedomGuy
FreedomGuy's picture

One of the most interesting charts was the budget breakout. Interest alone was about $221bil or slightly smaller than Medicare expenditures. This is amazing considering rates are effectively zero. I believe an analysis of Federal bonds will show that they are overweighted on short maturities in order to get as close to zero interest as possible.

That chart alone tells me the Feds will do whatever it takes to maintain ZIRP or the party is over and the government stares default squarely in the eye.

The other chart that goes with it was projected revenues and spending. They never even get close.

What cannot go on will not go on.

Sun, 01/04/2015 - 13:53 | 5620828 pgroup
pgroup's picture

The government will not stare default squarely in the eye, or anywhere else.

There will be no default. Cashflow is way more than debt service load.

What the govt WILL stare in the face is the neccessity of cutting entitlements OR continue QE/moneyprinting. Each choice is unpalatable (from govt viewpoint) with different consequences.

Mon, 01/05/2015 - 01:48 | 5622613 FreedomGuy
FreedomGuy's picture

They will default on either debt service or collectivist promises.

Sun, 01/04/2015 - 10:18 | 5620382 new game
new game's picture

bring it on - refinance time, lower payment will allow me to pull the plug and be a complete fuck off. crash this bitiach bitcheez!!!!!!!!!!!!!!!!

Sat, 01/03/2015 - 23:47 | 5619794 stant
stant's picture

All this is just short term trading. Moot. They will default and go to war

Sun, 01/04/2015 - 00:01 | 5619812 joego1
joego1's picture

I once had a flat girlfriend with finest ass on the planet. I still dream about that. I was trouble from behind.

Sun, 01/04/2015 - 00:15 | 5619857 Yen Cross
Yen Cross's picture

 I love perky boobies. ;-)

Sun, 01/04/2015 - 01:29 | 5619963 Schmuck Raker
Schmuck Raker's picture

If I wasn't using this 1990's N Korean software on my 2000's Lap-Top I'da crashed this Power'Imeriakist"Point presentation at the get-go. Inas much as I inherited some realy-good-fast Anglo-Compu techie DNA/RNA.... I'm a gonna take a snooze.......

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

....

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

..

Sun, 01/04/2015 - 02:26 | 5620048 HeavydutyMexica...
HeavydutyMexicanOfTheNorthernKingdom's picture

It's likely the FED will do exactly what the "experts" says they won't do.

Sun, 01/04/2015 - 03:05 | 5620089 lunaticfringe
lunaticfringe's picture

I love these mf er bankers. Refinance or get priced out, rates are going up. Three years in a row I hear this garbage- three years in a row I tell them why they are full of shit. All I use is the 25 year roadmap given to us by Japan.

So far, I am winning. These kid mortgage bankers think I am some old grizzled lunatic. I will refinance this spring. I was never good at calling tops but gotta think we're much closer than we were.

Sun, 01/04/2015 - 07:21 | 5620243 Intellikon
Intellikon's picture

Our algos made this call last month with similar projections on the 10Y in 2015,.. Looking at all the fundos in that slide deck it looks like yield is poised to melt down beyond 1.35

https://www.scribd.com/document_downloads/direct/251590263?extension=pdf...

https://twitter.com/Intellikon/status/544328457019072512

Sun, 01/04/2015 - 08:20 | 5620276 buzzsaw99
buzzsaw99's picture

Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth. [/Sherlock Holmes]

Sun, 01/04/2015 - 09:15 | 5620308 Cautiously Pess...
Cautiously Pessimistic's picture

"Get to work Mr. Chairman"

Signed,

C. Schumer

 

p.s. - yes, I believe the 'Mr.' can apply to our current androgynous Fed Chairperson. 

Sun, 01/04/2015 - 09:42 | 5620335 Seize Mars
Seize Mars's picture

Hmm, I wonder what Huzaifa Huxaifa would say about this?

Sun, 01/04/2015 - 09:50 | 5620341 knukles
knukles's picture

Yo!  Yen!  I'm with you and Gundlach

I couldn't give a crap about any other prognostications and forecasts other than these.
The Global Economy is oozing life, sucks, is in shambles.
Deflation is no longer a myth, what with oil
The central banks are scared shitless of deflation (makes deficit financing more expensive for the NWO's dreams)
Economies are going to crater due to oil (jobs, cap ex, etc)
Geopolitical risk gonna get worse, not better
Gonna be one hell of a call for additional margin w/ derivatives (demand for Treasuries)

CB's are NOT going to raise rates.
Anybody thinks so has been listening to the Wall Street Sophistry, Cramer, CNBS,etc., way the fuck too much

Rates are going lower.
I been saying that for 5+ years, been vilified for 5+ years, been right for 5+ years.
All I want for Christmas is the gold side of the long of long bonds and gold trade to work.

See you at 1.25% 10'S and 2% 30'S

Sun, 01/04/2015 - 10:29 | 5620395 new game
new game's picture

spot on knuks, been saying(and laughed at) for 20+ years going back to 10+ percent mortgage rates. now we approach the end game. the ultimate stimulation ponzi-zirp. no secrets, just mountains of unservicable debt, created by the ptb to keep servicing these mountains. math says we are nearing the "great reset"

japan first, then china/pax merica. which really is all needed to bring it down. 

ha, just a fucking joke, so start laughing, ha...

Sun, 01/04/2015 - 10:40 | 5620413 RSDallas
RSDallas's picture

For me, two interesting charts. One, U.S. debt to GDP. It's got to come down before we have any meaningful growth. Two, the commodities chart. Absolutely no recovery until the world wide mal-investment is purged from the system. What is scary is this debt chart doesn't include the derivative markets. I think the pop in grains is a head fake. The world only grows when there is a manageable level of debt and someone is making something.

Sun, 01/04/2015 - 10:48 | 5620426 RSDallas
RSDallas's picture

One more thing. His predictions are not much off from the Wizards at Hoisington Management. Can't wait to see their prognosis.

Sun, 01/04/2015 - 12:11 | 5620556 no life
no life's picture

Did he opine on Kim Kardashian's ass at all??

Sun, 01/04/2015 - 14:10 | 5620874 Bam_Man
Bam_Man's picture

Less than six months ago this clown Gundlach was saying he "sees the 10-year trading between 2.20% and 2.80% for the foreseeable future".

These guys are all the same. Full of bullsh*t.

Sun, 01/04/2015 - 16:11 | 5621132 andrewp111
andrewp111's picture

If 2014 is analogous to 2004, then the next crash should be in 2018. There are plenty of other reasons to think a big crash comes about then as well.

Do NOT follow this link or you will be banned from the site!