Treasury yields have been tumbling for around 20 years in what’s been an epic bull market for bonds. But with the Federal Reserve tapering its purchases of bonds and signaling that it could soon begin to tighten monetary policy, more and more experts have been declaring an end to the bull market.
But in contrarian fashion, DoubleLine Capital’s Jeff Gundlach has been arguing that the 10-year Treasury yield isn’t destined to go up. During a public webcast on January 14 when the 10-year yield was at around 3.0% and when Wall Street said it would climb to 3.4%, Gundlach predicted that it could fall as low as 2.5% in the near-term.
So far, he’s been dead right.
The 10-year yield touched a seven-month low of 2.52% earlier today, and many folks are just scratching their heads.
Treasury yields are probably the most important and most closely-followed interest rates in the world. So, when an economist or bond fund manager makes an accurate forecast about Treasury yields, his or her clients are probably doing very well. The chart of the 10-year probably explains why DoubleLine Funds continue to see investment inflows.
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