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

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...

Comments

taketheredpill Wed, 09/13/2017 - 10:33 Permalink

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 Wed, 09/13/2017 - 10:44 Permalink

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.

Cutter Wed, 09/13/2017 - 10:54 Permalink

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 Wed, 09/13/2017 - 11:31 Permalink

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