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If yields rise above 3%, stocks will end the year down. That is according to Jeffery Gundlach, manager of the Doubeline Total Return Bond Fund. Gundlach is of course a bond fund manager, so one should take his views on stocks with a grain of salt, but he may not be wrong. Three percent yields aren’t high by historical standards, but global central banks have kept rates so low for so long that economies may have become overly dependent on ultra-low rates. Bloomberg reports:

If yields on the 10-year Treasury break above 3 percent, there’s a high chance U.S. stocks will end the year down, according to Jeffrey Gundlach, chief investment officer of DoubleLine Capital.

“My idea that the S&P would go down on the year would become an extraordinarily strong conviction as the 10-year starts to make an accelerated move above 3 percent,” Gundlach said Tuesday during a webcast for his $51.8 billion DoubleLine Total Return Bond Fund.

Yields on 10-year Treasuries closed Tuesday at about 2.84 percent, down from their four-year high of 2.95 percent on Feb. 21. The S&P 500 Index closed at 2,765 on Tuesday, up 3.4 percent this year.

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