Gundlach Was Right – Even Investment Grade Credit Markets Are Crashing Today

It appears, as Jeff Gundlach warned last night, that the seizure in credit markets is about to get a lot more attention…

“The bond market is rallying because The Fed has reacted the seizure in the corporate bond market – which is not getting enough attention.”

The Fed cut rates, he added, “in reaction to even the investment being shutdown for 7 business days.“

Gundlach noted that Powell’s background in the private equity world – rather than academic economist land – has meant that his reaction function is driven by problems in the corporate bond market as “this will be problematic for the buyback aspect of the stock market.”

And today, even investment grade spreads are blowing out – by the most since at least 2011…

As HY is already at its widest since 2016…

And that’s why Gundlach is long gold:

“I turned bullish on gold in the summer of 2018 on my Total Return webcast when it was at 1190. And it just seems to me, as I talked about my Just Markets webcast, which is up on DoubleLine.com on a replay, that the dollar is going to get weaker.

And the dollar getting weaker seems to be a policy. And the Fed cutting rates, slashing rates is clearly going to be dollar negative. And that means that gold is going to go higher.“