Chief Executive Officer of DoubleLine Capital, Jeffrey Gundlach, has been quoted as saying that the US treasury yield curve inversion on maturities and short has signaled that the US economy is possessed with weakness. As a matter of fact, Gundlach has been known as the Bond King on Wall Street and on Tuesday, he also commented that the Treasury yield curve on two to five years on the maturities is suggesting that the doubt has been besieging the total bond market about FED’s plant to raise rates through 2019.
US two year treasury yield rose above three year treasury yield on Tuesday, 4th December, triggering the signal that the FED might have been on the edge of ending its rate-hike campign. Gundlach, who has been overseeing over $123 billion in assets, commented, “If the bond market trusts the Fed’s latest words about ‘data dependency,’ then the totally flat Treasury Note curve is predicting softer future growth (and) will stay the Fed’s hand.
If that is indeed to be the case, the recent strong equity recovery is at risk from fundamental economic deterioration, a message that is sounding from the junk bond market, whose rebound has been far less impressive. ” Gundlach also warned that the FED should be more careful about the selection of words, when they will be meeting to deliver their promised rate hike this month.