DoubleLine Capital's Jeffrey Gundlach Warns a Recession Could Trigger a Debt Crisis

According to Wallstreetcn, DoubleLine Capital CEO Jeffrey Gundlach warned that the next U.S. recession could trigger a debt crisis and send long-term Treasury yields sharply higher, while he said he is focusing on low-duration assets to protect DoubleLine Capital funds from further rate increases. He also said the U.S. government may step up policy intervention to curb a bond selloff, citing possibilities including a repeat of the Federal Reserve's Operation Twist or even debt restructuring that would cut coupon payments on outstanding bonds to reduce interest expenses. "If a recession occurs, fiscal conditions will come under intense scrutiny," Gundlach said at an event in New York, adding that the budget deficit would easily reach 12% of GDP and annual interest expenses would be about $3 trillion.