Jeff Gundlach appeared on CNBC yesterday and essentially said that he was a buyer [10 yr] at 2.4% – 2.6% yields. The Fed will be back supporting prices as other financial markets would be placed in turmoil if yields went too much higher.

One thing that he said I agreed with, viz, that higher taxes and the sequester cuts have [or are] reducing the deficit, thus, the Federal Reserve does not need to monetise the debt to the same extent. This reduces new supply, which, helps reduce price falls in the market. However it does nothing for the existing supply, which, was only bought by the Fed. Unless the Fed via QE steps back into the market, rates could very well rise higher.

What I disagree with is the effect of rising rates on housing prices. He talked about rising real estate values in S.Cal., suggesting that the market was too hot with +40% price rises year-to-date. Higher rates = lower house prices. If affordability is an issue, higher rates will cool that market off somewhat, therefore higher rates would be a good thing.

Essentially I agree though. QE is not over. Both markets will offer a buying opportunity, timing is the issue.