"Crazily Low" Bund Yields Spike Most In 3 Months, Gundlach Warns Of "Massive Risk At These Levels"

Tyler Durden's picture

In a curious case of 2015 deja vu, DoubleLine founder Jeffrey Gundlach says German bond yields are "crazily low," and expects them to rocket higher and rattle the US Treasury market when (if) the ECB scales back its bond purchases.


The FT reports that Gundlach warns the 10-year German Bund yield would jump to 1 per cent “pretty quickly”, from about 0.4 per cent today.

So far he has been right, just as in 2015 when Gundlach and Gross warned that Bunds were "the short of a lifetime."


And of course, as goes Bund yields, so goes UST yields...

“That would be a catalyst for US interest rates rising as well, as we’re all tied together these days. So we’re watching this pretty closely,” Gundlach said.


“You have massive risk at these levels.”


“I just don’t like 10-year Treasuries at this level, they don’t have any business being down here.”

Gundlach concluded ominously:

“I’m starting to come to the conclusion . . . that maybe we have to go on trouble-watch in the middle of 2018.”

For now, Gundlach's favorite bond indicator is pulling back...

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4shzl's picture

"If the ECB scales back its purchases"


Life of Illusion's picture





auricle's picture

So far he has been right, just as in 2015 when Gundlach and Gross warned that Bunds were "the short of a lifetime."


HAHHAH That short of a lifetime lasted for all of two months then promptly retraced to still lower lows. The 1% in bunds is achievable but that is it. Then another ride to new lower lows. 

wisehiney's picture

Keep spiking mofo, I am reloading TLT.

singsagaa's picture

When is Gundlach going to throw in the towel for higher US rates? Here is a news for you Gundlach, rates are going lower..much lower.

Pollygotacracker's picture

Like, you know  more than Jeff Gundlach?  Hahahaha!!

Pollygotacracker's picture

Name me one thing (asset class) the Central Banks haven't managed to f*ck up? 

taketheredpill's picture

Don't see the same scenario panning out:


- are the ECB/BOJ about to INCREASE QE?  Nope.

- Is Bond Sentiment Super positive?  Nope.

- are German 10 year yields at 0.10%? Nope.


onthedeschutes's picture

Here is an algo that works...every time...when headline reads "Massive Risk", or "Ugliest Chart", or "Biggest Fear", etc etc ...expect new all time highs on the indices within hours.  It's worked amazingly well for the past 9 years.

taketheredpill's picture

Already sold my Bunds for the safety of SPX.  Phew!

Cutter's picture

Exactly, in a world in hock up to its eyeballs, if Central Banks are out of the picture, just how do governments keep yields down?  

Rates may go lower in the short term, but rates have only one way to go long term: up, way up.

NEOSERF's picture

Venezuela 10 yr bond yield is 10% and has spiked recently to 16%...THIS is what is in store for all of us in the coming decade once this group of clowns loses control