Jeff Gundlach, the legendary bond fund manager at DoubleLine Funds, was on CNBC’s “Fast Money Halftime Report” discussing the economy and markets.
He warned that the housing market looked over-extended as reflected by the disconnect between high prices and rising mortgage rates.
Housing is the “Achilles heel” of the economy, he said.
These comments come in the wake of a series of housing market reports that have been softer than expected.
And many have blamed the disappointing data on rising mortgage rates, which tend to move with Treasury yields.
“I think the 10-year can go to 3.10% or so,” he said forecasting the Treasury market for the balance of the year.
When asked about the possibility of 3.5% rates or higher, Gundlach said that would come with a serious down move in the markets, which in turn would force rates to come back down.
Gundlach has been recently quoted as saying the 10-year would go no higher than 2.5% and fall as low as 1.7% this year.
There’s “fear and loathing in the markets,” he said.
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