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2026-09-18 05:38:09
Jeffrey Gundlach, CEO of DoubleLine Capital, known as the "New Bond King," has warned that a potential U.S. recession could trigger a debt crisis, driving long-term Treasury yields sharply higher—a prediction that breaks with decades of conventional wisdom, as bonds have long been considered safe-haven assets during periods of economic stress. Gundlach revealed that he is currently focusing on investing in shorter-duration assets to protect DoubleLine Capital's funds from the impact of continuously rising interest rates. He also predicts that the U.S. government is likely to implement further policy interventions to curb the concentrated sell-off of bonds. He mentioned several possible policy options, including the Federal Reserve launching another "Operation Twist," and in more extreme cases, debt restructuring—that is, reducing the coupon payments on existing bonds to reduce interest expenses. “Once an economic recession hits, the US fiscal situation will become a major focus of market attention,” he said at an event in New York. “At that time, the fiscal deficit as a percentage of GDP could easily reach 12%, and the annual interest payments would be around $3 trillion, a scale that is completely unsustainable.”
