"Investment Heavyweight Jeffrey Gundlach Predicts Massive Monetary Printing by Fed to Prop Up Long-Term Treasuries"

Article Rewrite

Title: Jeffrey Gundlach Predicts Massive Federal Reserve Intervention in U.S. Treasury Market Amidst Yield Spike

Published: June 14, 2025 Author: Alex Richardson For: Financeflux

Billionaire investor Jeffrey Gundlach, renowned for his insights on the financial markets, warns that the U.S. Federal Reserve may be compelled to inject massive liquidity into the economy, potentially resulting in a new round of quantitative easing (QE) to prop up the Treasury market.

In a recent interview at the Bloomberg Credit Forum, Gundlach, the founder of DoubleLine Capital, discussed the looming concerns surrounding the demand for long-term U.S. Treasuries and their impact on yields. He highlighted the escalating yields as a significant issue that could jeopardize the financial stability of the United States.

Quantitative easing (QE) is a monetary policy tool employed by central banks to stimulate economic growth by purchasing assets, primarily government securities, thereby increasing the money supply within the economy.

Many investors have gravitated towards short-term bonds this economic cycle, even Berkshire Hathaway, Warren Buffett's investment vehicle, reportedly owning at least 5% of the short-term T-bill market[1]. This shift in preference for short-term bonds has left long-term Treasuries struggling with decreased demand and corresponding increases in yields.

The growing yields could prove to be a severe burden on the U.S. Treasury if they rise above a certain threshold, potentially pegged at 6%, according to Gundlach. If this occurs, he forecasts a drastic response from the Federal Reserve, akin to the aggressive money-printing campaign unleashed during the Covid-induced turmoil of 2020[1].

"When the yields reach an uncomfortable level – say, around 6% – we will reach a point where the U.S. government will be facing a $5 trillion budget deficit during a recession, as they issue more bonds to compensate for declining revenue. At this juncture, the Federal Reserve could choose to intervene and announce a program to purchase long-term treasuries," Gundlach explained.

He added, "Once this announcement is made, there could be an immediate rally in long-term bond prices, akin to the market reaction witnessed following the Federal Reserve's announcement of buying corporate bonds during the Covid crisis[1]."

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"Investment Heavyweight Jeffrey Gundlach Predicts Massive Monetary Printing by Fed to Prop Up Long-Term Treasuries"