Ballooning U.S. debt issuance is capping gains in the Treasuries market even amid stock “carnage” that would typically boost bond prices, according to Jeffrey Gundlach, chief investment officer of DoubleLine Capital.
A global equity sell-off that’s seen major U.S. stock indexes erase 2018 gains has pushed benchmark 10-year Treasury yields to 2.88 percent, close to the lowest level since August.
While that rally should be stronger given the magnitude of the equity-market turmoil, crisis-era debt supply levels are making it difficult for yields to fall much lower, according to Gundlach.
“This isn’t much of a rally, given the carnage in global stock markets and given some of the real gut-wrenching movements in the S&P 500,” Gundlach said Tuesday on a webcast for his $47.5 billion DoubleLine Total Return Bond Fund. “One of the reasons for that is supply, which will continue to be an issue.”