NEW YORK (Reuters) - Jeffrey Gundlach, chief executive officer of DoubleLine Capital, said on Tuesday that U.S. Treasuries were “not attractive” even though the 10-year yield US10YT=RR, a benchmark for global borrowing costs, crossed the critical 3 percent threshold earlier in the day.
Gundlach, who oversees more than $119 billion in assets and spoke at a New York event for DoubleLine clients, said the core Consumer Price Index and the New York Federal Reserve Underlying Inflation Gauge suggest that U.S. inflation will go higher, which can hurt prices of government bonds.
Gundlach, known as Wall Street’s Bond King, said the Fed’s “quantitative tightening” was a factor in rising Treasury yields. The uptrend in yields, he said, will continue as foreigners will be averse to purchasing U.S. bonds because of hedging costs.
Gundlach said gold prices, which have broken their downtrend line, were on the verge of breaking out to the upside. “It’s getting almost exciting ... something big is happening,” he said.
“Gold is maintaining an upward pattern above its rising 200-day moving average, which is extremely good,” he added.
Based on classic chart reading, Gundlach said an “explosive, potential energy” of a huge “head-and-shoulders bottom” base was signaling a move of $1,000 in gold prices.
“I‘m not predicting it ... I‘m letting the market prove itself,” he said.
Reporting by Jennifer Ablan; editing by Leslie Adler and Tom Brown