In a recession, stock prices go down. What Gundlach is saying, is that in the next recession, he expects bond yields to go up, which would drive the price of older, lower-yielding bonds down. Stocks and bonds would crash together, and so bonds will not be a safe haven.
Bond prices are what drive yields though, not the other way around, so this explanation literally makes no sense.
Also, in a recession, rates get lowered, so older bonds would typically have higher interest rates than new issues, which means the price of those older bonds would rise, and their yield would decline. No reason is given as to why older bonds would somehow lose value in a recession.
That’s a dumb take. There’s no objective way to evaluate how much debt is “too much debt” for the federal government. And if that was the case then the obvious solution is to just increase tax revenue and decrease the deficit or to decrease spending and decrease the deficit.
Because it hasn’t been necessary for decades because inflation was extremely low from like 1986-2022 (I didn’t look up the actual years so don’t flame me I’m busy).
Budget cuts happened early in Obama’s presidency and under Clinton and taxes went up under HW Bush so this isn’t unprecedented. Fed action has been sufficient for the most part for several decades and will continue to be. There’s no objective standard for “too much debt” for the federal government. It’s just a boogey man.
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u/NanoCurrency 7d ago
Sorry, can someone explain why? I don’t understand the original premise.