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DoubleLine's Gundlach warns US Treasury yields are headed higher

Key Points
  • DoubleLine Capital CEO Jeffrey Gundlach said bond prices across the U.S. Treasury yield curve could fall if the 30-year yield closes above 3.25 percent twice in a row.
  • The yield on the 10-year Treasury note and 30-year Treasury bond both hit four-month highs early Wednesday.
  • The 10-year yield was currently trading around 3.08 percent and the 30-year around 3.22 percent.
Jeffrey Gundlach, founder of DoubleLine Capital LP.
Adam Jeffery | CNBC

Jeffrey Gundlach, chief executive officer of DoubleLine Capital, on Wednesday said bond prices across the U.S. Treasury yield curve could fall if the 30-year yield closes above 3.25 percent twice in a row.

The yield on the 10-year Treasury note and 30-year Treasury bond both hit four-month highs early Wednesday. The 10-year yield was currently trading around 3.08 percent and the 30-year around 3.22 percent.

Gundlach told Reuters he was still forecasting 6 percent on the 10-year yield by the next presidential election or a year after.

"I first made that statement in July 2016 when the overwhelming consensus view was the 10-year was soon headed to 1 percent," he said. "So the observation is right a little over two years later with 10s a little over 3 percent."

U.S. Markets Overview: Treasurys chart

He added: "My 6 percent by 2021 call is perfectly on track. No reason at all to change it. A move soon to higher yields would be signaled by the 30-year closing two days in a row over 3.25 percent."

Last week, Gundlach likened debt-financed U.S. budget deficits to Miracle-Gro plant food and remarked that the benefits of the ballooning deficit, stemming from tax cuts, were not permanent. On Wednesday, Gundlach said, "The deficit is insane. A truly strong economy produces a fiscal surplus."

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