DoubleLine’s Jeff Gundlach warns rates could climb past 6% on long-dated bonds, risking a US recession and market ‘collision’
The 10-year Treasury yield has already surpassed the psychological 5% mark amid a global government bond sell-off
The US Treasury’s $6 billion long-dated bond buyback — one of its biggest in years — failed to calm markets, with yields rising the day it was announced
When the man they call the ‘Bond King’ starts talking about a market ‘collision,’ it’s worth pulling up a chair. Jeff Gundlach, CIO of DoubleLine Capital, told an audience in Manhattan on Thursday that Treasury yields have already spiked to nearly two-decade highs and could go ‘much, much higher.’ The 10-year Treasury yield has recently surpassed 5% — an implemented, real-time market level, not a forecast — while Gundlach floated a scenario, explicitly framed as speculative, where long-dated yields push past 6%.
Treasury’s Buyback Bet Meets a Skeptical Market
Washington already tried to intervene. Last week the US Treasury announced a $6 billion long-dated bond buyback program, one of its largest in years, aimed at calming the bond market — a plan Treasury Secretary Scott Bessent reportedly framed by declaring ‘I am the house now.’ It didn’t work as hoped: yields jumped the very day the buyback was announced, and Gundlach says the move sidesteps the market’s real concern — underlying fiscal issues, not liquidity mechanics. He warned that ‘defaults are going to start coming in fast and furious’ if rates keep climbing, pointing to vulnerabilities in the AI trade and private credit sector.
What This Means for Your Portfolio and Wallet
Higher long-term yields translate directly into pricier mortgages, auto loans, and corporate refinancing — the exact mechanism behind the biggerpockets.com warning that ‘the U.S. government may have just lost the war on mortgage rates.’ If you’re house-hunting or refinancing, a 10-year yield holding above 5% (with risk of climbing toward 6%) means borrowing costs stay elevated well beyond what the Fed’s own moves might suggest.
Strategic Positioning & Defense Ideas
Standard hedges in this environment include laddering short-duration bonds instead of long-dated ones, holding some cash to capture higher money-market yields, and diversifying away from rate-sensitive sectors like housing and private credit. Disclaimer: This analysis is for educational and informational purposes only and should not be construed as financial or investment advice.
What to Watch Next
Watch upcoming Treasury auctions, oil prices tied to reserve replenishment, and any follow-up buyback announcements. Full commentary is available via Business Insider and BiggerPockets’ original reporting.
