GUNDLACH: Here’s how we’ll know the bond bull market is dead

DoubleLine Funds

DoubleLine Capital founder Jeff Gundlach said that if the 10-year Treasury yield hits 3%, it would mark the end of the bull market in bonds.

Gundlach hosted his annual “Just Markets” webcast on Tuesday, January 10 to discuss his 2017 outlook.

In what appeared to be a jab at Bill Gross, a portfolio manager at Janus, Gundlach referenced “second-tier bond managers” focusing on a 2.6% yield on the 10-year note as the market’s death spell.

“If 2.60% is broken on the upside — if yields move higher than 2.60% — a secular bear bond market has begun,” Gross said in his monthly investment outlook earlier on Tuesday. Bond yields rise when their prices fall.

In Gundlach’s December webcast, he said a rise in the benchmark 10-year yield to 3% and above would have “a real impact on market liquidity in corporate bonds and junk bonds.”

Gundlach also warned of a sell-off in the stock market around inauguration day on January 20, as investors grasp that President-elect Donald Trump doesn’t have a magic wand to implement the growth plans they are optimistic about.

His DoubleLine Total Return Bond Fund posted a net outflow of $3.5 billion in December, its biggest one-month withdrawal ever, data from research firm Morningstar showed earlier in January. The webcast did not discuss any funds

Here are highlights from Gundlach’s presentation: