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

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