Jeffrey Gundlach says he has been buying bonds “recently” with yields suddenly looking toppy after climbing this week to their highest levels in more than a decade. On Monday, the yields on the 2-year and 5-year U.S. Treasury notes hit their highest levels since 2007, while the 10-year rate hit a high not seen since 2010. They had pulled back some by Tuesday morning. Yields and prices move in opposite directions with prices going higher overnight as rates fell. “The U.S. Treasury Bond market is rallying tonight,” said the so-called bond king and DoubleLine Capital CEO in a tweet late Monday night. “Been a long time. I have been a buyer recently.” Gundlach’s buying follows his comments from a little more than a week ago , when he said investors should sell stocks and buy bonds. “It was brutal to be a bond investor for the past several years but now it’s actually the place to be and the opportunities are more exciting now than any time, in my view, in the past 10 years,” he said on a webcast. He also revealed then that DoubleLine had bought long-term Treasuries earlier in the month with rates at such attractive levels and the market so beaten up. The 2-year Treasury was yielding 4.25% on Tuesday and the 10-year Treasury was yielding 3.86% Those comments came ahead of the Federal Reserve’s two-day policy meeting that concluded on Sept. 21 and the central bank raised interest rates by another 0.75 percentage point, as expected. The Fed also indicated the terminal rate will go as high as 4.6% before it’s done hiking, and that it will be particularly aggressive this year, raising to 4.4% before the end of 2022. Gundlach has said the Fed is “over-tightening” and that looming deflationary forces could force it to reverse its current monetary policy. That would send yields lower and bond prices higher.
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