Bond guru Jeffrey Gundlach says a big shift in market psychology has occurred, with “fear and loathing” ruling the day. He says investors have gone from thinking, “I don’t care about volatility, I want income,” to thinking “I don’t care about income, I don’t want volatility”. He also says he doesn’t yet see signs that the interest rate rise is over. Gundlach thinks that the Federal Reserve will soon taper its quantitative easing program, which will lead to a jump in markets at first, but also more volatility. While short term treasury yields remain low, he says there is plenty of yield to be had in other areas of the bond market, like closed-end bond funds and mortgage REITs. And he talks about why he thinks people are getting the housing market rally too much credit.
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