Guggenheim: “3% Is The Beginning Of The End” / by Tyler Durden / Jan 13, 2017

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The debate over what yield on the 10Y spells the end of the 30 year bond bull market, and would spillover into selling among other asset classes, is heating up.

Earlier this week, in his monthly annual letter Bill Gross wrote that 2.6% is the only level for the market that matters: “This is my only forecast for the 10-year in 2017. If 2.60% is broken on the upside – if yields move higher than 2.60% – a secular bear bond market has begun. Watch the 2.6% level. Much more important than Dow 20,000. Much more important than $60-a-barrel oil. Much more important that the Dollar/Euro parity at 1.00. It is the key to interest rate levels and perhaps stock price levels in 2017.”

Later that day, during his webcast with investors, Doubleline’s Jeff Gundlach slammed Gross as a “second tier bond manager” for his “forecast”, and countered that 3.0% is the magic number: “the last line in the sand is 3 percent on the 10-year. That will define the end of the bond bull market from a classic-chart perspective, not 2.60%” as Gross suggested.  He then added that “almost for sure we’re going to take a look at 3 percent on the 10-year during 2017, and if we take out 3 percent in 2017, it’s bye-bye bond bull market. Rest in peace.”

Today, a third bond manager joined the frey when Guggenheim’s Scott Minerd sided with Gundlach and said that 10-year yields could end their long-term trend if they rise above 3%.

“It’s basically the beginning of the end,” Minerd told Bloomberg Television. “Long-term trends like this don’t reverse quickly,” he added, saying yields might spend several building a new base before taking off.”



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