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Market unwind will be ‘turbulent,’ Gundlach predicts

Jeffrey Gundlach, chief executive of DoubleLine, speaks in New York on May 25, 2011.

Jessica Rinaldi/Reuters

Jeffrey Gundlach, chief executive of Doubleline Capital, said on Wednesday that the "low rate-low volatility" market environment went on for so long that now "the unwind will be turbulent and not over in a couple of days."

Gundlach, who is known as the Wall Street bond king, told Reuters that bitcoin was the "lead horse" of risk assets and its recent plunge has had a cascading effect on other risk assets.

Gundlach had correctly predicted that if the 10-year U.S. Treasury note yield went above 2.63 per cent, U.S. stock investors would be spooked.

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"Clearly, the market gets shaky when the 10-year hits 2.85 per cent," Gundlach said. "Just look at this week, and today. Makes one consider what could be coming if 10s push over 3 and 30s (30-year Treasury bond) over 3.22 per cent."

The 10-year yield is currently trading around 2.83 per cent. Gundlach said it is "hard to love bonds at even a 3 per cent" yield. "Rising interest rates are a problem and the U.S. is in debt and there is massive bond supply," Gundlach said.

Los Angeles-based DoubleLine oversees $118-billion in assets under management, as of December 2017.

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