Latest news with #DoubleLineCapital
Yahoo
2 days ago
- Business
- Yahoo
Gundlach says rate cuts are a virtual certainty but he's still bearish on the long bond
The so-called bond king had anticipated two rate cuts this year from the Federal Reserve, but a bombshell employment report now has him expecting a third. In a wide-ranging interview on CNBC the founder, CEO and CIO of DoubleLine Capital, Jeffrey Gundlach discussed the Fed, the dollar DXY, the Treasury curve and inflation. His main talking points were predictions for easier monetary policy, for stocks to rally as a consequence, for the dollar to soften and for the U.S. Treasury curve to steepen (whereby long bond yields BX:TMUBMUSD30Y trade much higher than short-term notes). Mortgage rates plunge to 10-month low, opening window of opportunity for house hunters 'She lives alone': My mother-in-law, 86, gets $1,300 in Social Security. Is that enough to live on? Super Micro backs away from a lofty goal, and its stock is sinking 'I feel shaken': A man offered $50 to powerwash my patio. He would not take 'no' for an answer. His conviction that rates will be cut stems from the observation that 2-year Treasury note BX:TMUBMUSD02Y yields at 3.7% are some 70 basis points or so below the Fed funds rate FF00. The bond market, he notes, is looking for a rate cut and as he points out, 'the Fed always follows the two-year.' His views are reinforced by his relatively dispassionate approach to inflation. He thinks the Fed must look through the impact of tariffs and also points out that commodity prices generally are not flashing inflation signals, even with the propellant of a weaker dollar. He quotes Milton Friedman to back up his argument: 'Inflation is always and everywhere a monetary phenomenon' while highlighting that the M2 measure of money supply is not rising in an alarming way. Tariffs don't increase money supply, he adds, and he prefers to watch import and export prices as a measure of capturing inflation. These readings average out around the Fed's target at present. Gundlach was positive on stocks because rate cuts take the pressure off stock valuations — lower rates means less competition from bonds and reduce the discount rate applied to future earnings streams — but his views are nuanced by his bearish stance on the dollar. While he thinks equities will rally in international markets as well as the U.S., a lower dollar will improve the returns on the former. Gundlach also is of the opinion that the Treasury curve will continue to steepen, with the yield difference between the 2-year and 30-year bonds could jump from 110 basis points right now to 150 basis points. And, because Fed Chair Jerome Powell will most likely be replaced by a rates dove, this trend is likely to intensify as short-term yields fall. Gundlach also makes the argument that lower tax revenue resulting from lower growth will mean increased bond issuance — particularly at the short end of the curve — to fund government expenditure. Gundlach made one final recommendation: gold GC00 , which he thinks benefits from the weak dollar, declining rates and technical trends in trading. 'If you're long gold, you haven't anything to worry about,' he advises. 'Historical trends are no longer working.' This strategist says retail investors are completely baffling Wall Street. Parents are draining money from retirement accounts and home equity to pay for college. They should do this for their kids instead. Gold prices are soaring again. Here's why a new record could be right around the corner. 'I have never been asked for money before': My friend wants to borrow $1,600 to pay her rent. Do I say yes? Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
3 days ago
- Business
- Bloomberg
DoubleLine Capital Sees Scope for US Dollar to Sink Further
The dollar is primed to fall a lot further and the appointment of a new Federal Reserve chair who's willing to cut interest rates quickly could be the catalyst, according to Bill Campbell, portfolio manager at DoubleLine Capital. 'There's potentially a lot more gas left in the tank for the dollar to move lower,' Campbell said in an interview. DoubleLine Capital had $95 billion in assets under management in September 2024.
Bloomberg
21-07-2025
- Business
- Bloomberg
DoubleLine's Deputy CIO Preps for ‘Shadow Fed' to Drive Rates Down
DoubleLine Capital's Jeffrey Sherman is among investors backing a bond trade that's emerged as a go-to way to hedge against the risk that President Donald Trump moves to fire the Federal Reserve chair. 'We have the same trade everyone's talking about,' the firm's deputy CIO said on Bloomberg TV's ETF IQ on Monday.
Mint
14-06-2025
- Business
- Mint
Gundlach Is Latest to Sound Corporate Debt Alarms: Credit Weekly
(Bloomberg) -- DoubleLine Capital has its lowest-ever allocations to speculative-grade bonds now, because valuations just don't reflect the risks. The money manager has been gradually cutting its high-yield bonds and other sub-investment-grade debt over the past two years, Jeffrey Gundlach, chief executive officer, said at the Bloomberg Global Credit Forum in Los Angeles this week. There are myriad risks, including inflation and tariffs, and investors aren't getting paid for them, he said. Spreads, or risk premiums, on US high-yield notes are around 3 percentage points now, according to Bloomberg index data. That's well below the two-decade average of 4.9 percentage points, and close to the lowest levels since 2007. At some point, there will be a selloff and it will make sense to go bargain hunting, Gundlach said. 'We want to be a liquidity provider when you get paid to be a liquidity provider — and you're not now,' he said. 'Spreads are very uninteresting in the credit market.' Gundlach is one of a series of market watchers who have expressed worries about nosebleed valuations in corporate debt. Jamie Dimon said this week that he wouldn't be buying credit now if he were a fund manager, echoing comments he made last month. Sixth Street Partners co-founder Josh Easterly has also voiced concern. These concerns are largely being shrugged off in credit markets. Valuations are high because so many investors are eager to buy now, demand that has helped new issues for high-grade US corporate bonds this year garner nearly four times as many orders as there have been bonds for sale. But still there are ample signs of trouble ahead. Last month, more debt from blue-chip companies was downgraded than upgraded, the first time that's happened since December 2023, according to JPMorgan credit strategists Eric Beinstein and Nathaniel Rosenbaum. Corporate cash levels are falling at blue chip US companies. And Israel's attacks on Iran late this week could potentially spiral into a bigger regional conflict, pushing up oil prices, and boosting inflation. By the start of next month, around $50 billion of debt will have fallen out of high-grade indexes this year due to ratings cuts, whereas only $8 billion have joined thanks to upgrades, the starkest disparity since 2020. Warner Bros. Discovery Inc. was cut below investment-grade by Moody's Ratings this week following the media company's decision to split in two. It's the fifth-largest fallen angel ever, according to JPMorgan strategists, based on debt falling out of their high-grade index. And corporate debt investors are showing at least some signs of growing more cautious. Returns on CCC bonds, the riskiest of junk debt, are lagging those of B and BB rated notes, suggesting increasing worries over the prospect of defaults. 'We're of the opinion that there's still some risks in the marketplace, that there's still unresolved issues here,' said Adam Abbas, head of fixed income at Harris Associates. 'The market may at least inject some more bouts of volatility in the future, and we need to be cognizant of that despite our fundamental view that everything structurally in credit is going to be OK.' --With assistance from Lisa Abramowicz. More stories like this are available on
Bloomberg
14-06-2025
- Business
- Bloomberg
Gundlach Is Latest to Sound Corporate Debt Alarms: Credit Weekly
DoubleLine Capital has its lowest-ever allocations to speculative-grade bonds now, because valuations just don't reflect the risks. The money manager has been gradually cutting its high-yield bonds and other sub-investment-grade debt over the past two years, Jeffrey Gundlach, chief executive officer, said at the Bloomberg Global Credit Forum in Los Angeles this week. There are myriad risks, including inflation and tariffs, and investors aren't getting paid for them, he said.
