Jeffrey Gundlach, DoubleLine’s CEO and CIO, observes that financial markets are behaving “strangely” compared to historical patterns. During the recent April stock pullback, both the dollar and Treasury yields fell—the opposite of what typically occurred during S&P 500 corrections over the past 15 years. This unusual behavior reflects growing awareness that America’s $2 trillion budget deficit and persistent interest rates make the country’s interest expenses unsustainable.
Gundlach argues that 30-year Treasury bonds have lost their status as flight-to-quality assets, as they’re no longer responding predictably to interest rate changes or inflation data. He’s avoiding long bonds until yields potentially reach 6%, which could trigger quantitative easing and a significant rally. Meanwhile, he views gold as the new safe-haven asset, no longer just for “lunatic survivalists” but now a legitimate investment embraced by central banks.