Jeffrey Gundlach warns of structural shifts in markets and unsustainable U.S. debt
Jun. 11, 2025 4:03 PM ET
By: Jason Capul, SA News Editor
DoubleLine Capital CEO Jeffrey Gundlach raised red flags about shifting market dynamics and unsustainable U.S. fiscal policy during his appearance at Bloomberg’s Global Credit Forum. Gundlach noted that several long-standing market relationships appear to be breaking down, citing unusual behavior in both the dollar and Treasury yields.
“In the last 15 years, there’s been a number of corrections on the S&P 500 ( SP500), and in every single one of them, when the S&P goes down more than 10%, the dollar index, the trade-weighted dollar index ( DXY) goes up,” Gundlach explained. “This time the dollar went down when the S&P 500 went down almost 20% — that’s strange. Things are behaving differently.”
He pointed to recent yield curve activity as another example. Traditionally, rate cuts by the Federal Reserve bring long-term yields lower, but this time the 10-year Treasury yield ( US10Y) has climbed, even as inflation shows signs of rebounding.
“I think what we have is recognition that the interest expense for the United States is untenable if we continue running a $2.1T budget deficit, and we continue to have sticky interest rates,” he said.
Gundlach emphasized that the average Treasury coupon has nearly doubled, from under 2% to above 4%, as older, low-yielding debt matures.
"There's an awareness now that the long-term Treasury bond is not a legitimate flight to quality asset," Gundlach said.
He concluded with “I think there's the reckoning is coming is that we have to somehow figure out how we're going to deal with $37T.”
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