Latest news with #DoubleLineCapital
Mint
14-06-2025
- Business
- Mint
Gundlach Is Latest to Sound Corporate Debt Alarms: Credit Weekly
(Bloomberg) -- DoubleLine Capital has its lowest-ever allocations to speculative-grade bonds now, because valuations just don't reflect the risks. The money manager has been gradually cutting its high-yield bonds and other sub-investment-grade debt over the past two years, Jeffrey Gundlach, chief executive officer, said at the Bloomberg Global Credit Forum in Los Angeles this week. There are myriad risks, including inflation and tariffs, and investors aren't getting paid for them, he said. Spreads, or risk premiums, on US high-yield notes are around 3 percentage points now, according to Bloomberg index data. That's well below the two-decade average of 4.9 percentage points, and close to the lowest levels since 2007. At some point, there will be a selloff and it will make sense to go bargain hunting, Gundlach said. 'We want to be a liquidity provider when you get paid to be a liquidity provider — and you're not now,' he said. 'Spreads are very uninteresting in the credit market.' Gundlach is one of a series of market watchers who have expressed worries about nosebleed valuations in corporate debt. Jamie Dimon said this week that he wouldn't be buying credit now if he were a fund manager, echoing comments he made last month. Sixth Street Partners co-founder Josh Easterly has also voiced concern. These concerns are largely being shrugged off in credit markets. Valuations are high because so many investors are eager to buy now, demand that has helped new issues for high-grade US corporate bonds this year garner nearly four times as many orders as there have been bonds for sale. But still there are ample signs of trouble ahead. Last month, more debt from blue-chip companies was downgraded than upgraded, the first time that's happened since December 2023, according to JPMorgan credit strategists Eric Beinstein and Nathaniel Rosenbaum. Corporate cash levels are falling at blue chip US companies. And Israel's attacks on Iran late this week could potentially spiral into a bigger regional conflict, pushing up oil prices, and boosting inflation. By the start of next month, around $50 billion of debt will have fallen out of high-grade indexes this year due to ratings cuts, whereas only $8 billion have joined thanks to upgrades, the starkest disparity since 2020. Warner Bros. Discovery Inc. was cut below investment-grade by Moody's Ratings this week following the media company's decision to split in two. It's the fifth-largest fallen angel ever, according to JPMorgan strategists, based on debt falling out of their high-grade index. And corporate debt investors are showing at least some signs of growing more cautious. Returns on CCC bonds, the riskiest of junk debt, are lagging those of B and BB rated notes, suggesting increasing worries over the prospect of defaults. 'We're of the opinion that there's still some risks in the marketplace, that there's still unresolved issues here,' said Adam Abbas, head of fixed income at Harris Associates. 'The market may at least inject some more bouts of volatility in the future, and we need to be cognizant of that despite our fundamental view that everything structurally in credit is going to be OK.' --With assistance from Lisa Abramowicz. More stories like this are available on
Bloomberg
14-06-2025
- Business
- Bloomberg
Gundlach Is Latest to Sound Corporate Debt Alarms: Credit Weekly
DoubleLine Capital has its lowest-ever allocations to speculative-grade bonds now, because valuations just don't reflect the risks. The money manager has been gradually cutting its high-yield bonds and other sub-investment-grade debt over the past two years, Jeffrey Gundlach, chief executive officer, said at the Bloomberg Global Credit Forum in Los Angeles this week. There are myriad risks, including inflation and tariffs, and investors aren't getting paid for them, he said.
Yahoo
13-06-2025
- Business
- Yahoo
Reckoning Is Coming for US Treasuries, Says Gundlach
DoubleLine Capital CEO Jeffrey Gundlach says a "reckoning is coming" for US treasuries. "You should be thinking about increasing your allocations to non-dollar investments," he said at the Bloomberg Global Credit Forum.
Yahoo
12-06-2025
- Business
- Yahoo
'Sell America' is in full force for elite investor Jeffrey Gundlach, who warns of a US debt 'reckoning'
Investor Jeff Gundlach expressed caution over the US debt load in recent remarks. He said the "untenable" debt burden in America is heading for a "reckoning." The so-called "King of Bonds" said his firm is starting to introduce foreign currencies to its funds. Elite investor Jeffrey Gundlach is doubling down on the '"Sell America" trade. The DoubleLine Capital CEO, previously coined as the "King of Bonds," raised concerns about dollar-denominated assets when speaking at the Bloomberg Global Credit Forum on Wednesday. At the core of his comments is growing concern over America's swelling debt load, which is expected to get even bigger if President Donald Trump's "Big Beautiful Bill" eventually passes. "There's an awareness now that the long-term Treasury bond is not a legitimate flight-to-quality asset," Gundlach said, warning that a "reckoning is coming." He's referring to recent volatility in long-dated government bonds, like 30-year Treasurys, which haven't been trading like the sure-thing safe bet they're supposed to be. And Gundlach's firm has been putting its money where its mouth is. The DoubleLine CEO said his firm has been allocating more fund holdings to foreign currencies, and recommended that investors broadly start to think about boosting non-dollar-denominated holdings. Gundlach also sees the tide turning in the global stock market. "Things always take longer than people think, but it's happening in real-time, and the next one will be selective emerging market equities as opposed to the US," Gundlach said. Gundlach highlighted multiple unusual patterns that have been flashing in US markets this year. He sees these as signs that markets are likely concerned about the US debt, and that faith in US assets is starting to fade, he added. The US dollar and stocks. When the S&P 500 falls, the value of the dollar typically moves higher relative to other currencies, Gundlach said. But in April, when the S&P 500 tanked 20% amid the turmoil from Donald Trump's tariffs, the US dollar also weakened in value. The US Dollar Index, which weighs the greenback against a basket of foreign currencies, traded around 97.8 on Thursday, down 9% from levels at the start of the year. US Treasurys. When the Fed cuts interest rates, the 10-year US Treasury yield, which is tied to long-term interest rate expectations in the economy, typically falls. But the 10-year yield has climbed around 74 basis points from its low in September, around the time the Fed issued its first rate cut. "So I think what we have is recognition is that the interest expense for the United States is untenable if we continue running a $2.1 trillion budget deficit and we continue to have sticky interest rates," Gundlach said of the market shifts. Foreign investors have steadily added exposure to the US market over the last 17 years, Gundlach said, noting that the foreign net investment position in the US currently hovered around $25 trillion. "It's not inconceivable that some of the $25 trillion that came in just a couple — not even two decades — could go out," Gundlach said. "You should be thinking about increasing your allocations to non-dollar investments. And it's already working." Gundlach said there were several areas where investors could find safety away from US assets. Gold. Gundlach said he's continued to hold gold when it reached the level around $3,000 an ounce, and that he also holds stakes in gold miners. Previously, he's said that he believes gold could rally to as high as $4,000 an ounce as concerns swirl over tariffs, geopolitical conflict, and rising debt levels in the US. "I think gold is a real asset class. It's no longer for lunatic survivalists and wild speculators," he said. India. Gundlach also said investors should look into Indian assets, suggesting that India could see a similar run-up in economic growth that China has seen over the past three decades. India is riddled with many of the same economic issue China faced 35 years ago, Gundlach said, though be believed many of those issues can be fixed. "I don't know how long it will take, but that's one you buy," he said. Gundlach has consistently sounded the alarm on rising deficits in the US for years, and encouraged investors to pile into safe-havens. But forecasters on Wall Street have cast doubt on the "Sell America" trade, which is hinges on the idea that US will stop outperforming other assets in the world. JPMorgan and Morgan Stanley are among those who have said that they believe US assets will continue to dominate global markets. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
12-06-2025
- Business
- Business Insider
'Sell America' is in full force for elite investor Jeffrey Gundlach, who warns of a US debt 'reckoning'
Investor Jeff Gundlach expressed caution over the US debt load in recent remarks. He said the "untenable" debt burden in America is heading for a "reckoning." The so-called "King of Bonds" said his firm is starting to introduce foreign currencies to its funds. Elite investor Jeffrey Gundlach is doubling down on the '" Sell America" trade. The DoubleLine Capital CEO, previously coined as the "King of Bonds," raised concerns about dollar-denominated assets when speaking at the Bloomberg Global Credit Forum on Wednesday. At the core of his comments is growing concern over America's swelling debt load, which is expected to get even bigger if President Donald Trump's " Big Beautiful Bill" eventually passes. "There's an awareness now that the long-term Treasury bond is not a legitimate flight-to-quality asset," Gundlach said, warning that a "reckoning is coming." He's referring to recent volatility in long-dated government bonds, like 30-year Treasurys, which haven't been trading like the sure-thing safe bet they're supposed to be. And Gundlach's firm has been putting its money where its mouth is. The DoubleLine CEO said his firm has been allocating more fund holdings to foreign currencies, and recommended that investors broadly start to think about boosting non-dollar-denominated holdings. Gundlach also sees the tide turning in the global stock market. "Things always take longer than people think, but it's happening in real-time, and the next one will be selective emerging market equities as opposed to the US," Gundlach said. 2 signs of stress Reuters Gundlach highlighted multiple unusual patterns that have been flashing in US markets this year. He sees these as signs that markets are likely concerned about the US debt, and that faith in US assets is starting to fade, he added. The US dollar and stocks. When the S&P 500 falls, the value of the dollar typically moves higher relative to other currencies, Gundlach said. But in April, when the S&P 500 tanked 20% amid the turmoil from Donald Trump's tariffs, the US dollar also weakened in value. The US Dollar Index, which weighs the greenback against a basket of foreign currencies, traded around 97.8 on Thursday, down 9% from levels at the start of the year. US Treasurys. When the Fed cuts interest rates, the 10-year US Treasury yield, which is tied to long-term interest rate expectations in the economy, typically falls. But the 10-year yield has climbed around 74 basis points from its low in September, around the time the Fed issued its first rate cut. "So I think what we have is recognition is that the interest expense for the United States is untenable if we continue running a $2.1 trillion budget deficit and we continue to have sticky interest rates," Gundlach said of the market shifts. Foreign investors have steadily added exposure to the US market over the last 17 years, Gundlach said, noting that the foreign net investment position in the US currently hovered around $25 trillion. "It's not inconceivable that some of the $25 trillion that came in just a couple — not even two decades — could go out," Gundlach said. "You should be thinking about increasing your allocations to non-dollar investments. And it's already working." Where to go if you're "selling America" Gundlach said there were several areas where investors could find safety away from US assets. Gold. Gundlach said he's continued to hold gold when it reached the level around $3,000 an ounce, and that he also holds stakes in gold miners. Previously, he's said that he believes gold could rally to as high as $4,000 an ounce as concerns swirl over tariffs, geopolitical conflict, and rising debt levels in the US. "I think gold is a real asset class. It's no longer for lunatic survivalists and wild speculators," he said. India. Gundlach also said investors should look into Indian assets, suggesting that India could see a similar run-up in economic growth that China has seen over the past three decades. India is riddled with many of the same economic issue China faced 35 years ago, Gundlach said, though be believed many of those issues can be fixed. "I don't know how long it will take, but that's one you buy," he said. Gundlach has consistently sounded the alarm on rising deficits in the US for years, and encouraged investors to pile into safe-havens. But forecasters on Wall Street have cast doubt on the "Sell America" trade, which is hinges on the idea that US will stop outperforming other assets in the world. JPMorgan and Morgan Stanley are among those who have said that they believe US assets will continue to dominate global markets.
