NEW YORK (Reuters) – Jeffrey Gundlach, chief executive of investment firm DoubleLine Capital, said Friday’s report on U.S. nonfarm payrolls in April “feels to me that it’s going to be weak.”
Gundlach was speaking at a private DoubleLine event in New York on Wednesday, a day after predicting the Federal Reserve would likely not raise interest rates this year.
He made the comment a few hours after the ADP National Employment Report showed that U.S. private employers boosted payrolls by 169,000 in April, the smallest gain since January 2014 and below economists’ forecasts for an increase of 200,000.
The ADP report, however, has a poor track record for predicting nonfarm payrolls, which is reported by the U.S. Department of Labor and which most economists expect to rebound from a poor March that was attributed to bad weather.
Economists polled by Reuters on average expect April nonfarm payrolls to rise by 224,000.
Gundlach also noted that the U.S. trade deficit in March swelled to the highest level in more than six years, bolstered by a flood of imports that may have sapped the U.S. economy of any growth in the first quarter. “The U.S. trade data points to economic contraction,” he said.
All told, Gundlach said the Fed is unlikely to raise short-term rates this year. “I don’t think it’s going to happen,” Gundlach added.
He reiterated his favorite investment at the moment, Puerto Rico municipal bonds.
He purchased some pension obligations Puerto Rico munis last week with a yield of 6.2 percent at 37.5 cents on the dollar, he said. “I hope Puerto Rico munis go lower so I can buy more,” he said.
DoubleLine is based in Los Angeles, and had $73 billion in assets under management as of March 31.
It has attracted net inflows of money for 15 straight months, becoming one of the prime beneficiaries of outflows afflicting Allianz SE’s <ALVG.DE> Pacific Investment Management Co, which prominent bond investor Bill Gross left in September.
Last year, Gundlach correctly forecast that U.S. Treasury yields would fall, rather than rise as many expected, because inflationary pressures were nonexistent and technical factors such as aging demographics were at play.
(Reporting by Jennifer Ablan. Editing by Andre Grenon, Bernard Orr)
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