The Treasury market is in its worst slump in decades, but billionaire “bond king” Jeff Gundlach jumped at the chance to buy US debt.
“The US Treasuries market is recovering tonight. It’s been a long time coming. I was a buyer recently,” the CEO of DoubleLine Capital told his nearly 250,000 Twitter followers early Tuesday morning. tweet. His nickname “The Bond King” comes from his success in the fixed income market.
U.S. Treasury yields moved lower on Tuesday as prices rose. The yield on the 10-year Treasury note fell 10 basis points to 3.813% after the yield rose above 3.9% for the first time since 2010 on Monday. The yield on the two-year government bond fell by 7 basis points to 4.24%.
According to Bank of America, Treasuries are experiencing their worst decline since 1949. The iShares US Aggregate Bond ETF is down 16% through 2022 and the global bond market has plunged into its first bear market in more than three decades.
Treasuries have been hit hard this year as interest rates have risen on the back of the Federal Reserve and other global central banks fighting high inflation through rate hikes. The Fed raised interest rates by another 75 basis points last week to bring the fed funds rate to a range of 3% to 3.25%.
The 10-year yield is up 230 basis points this year to 1.51% due in 2021. The Treasury market signals an economic recession when short-term yields rise above long-term yields.