August 2, 2021

Bond King Jeff Gundlach says there is a simple reason Treasury yields are so low even as inflation surges

Bond guru Jeffrey Gundlach of DoubleLine Capital said it is no mystery why U.S. Treasury yields are anchored lower despite evidence that inflation is rising in an economy attempting to rebound from a stultifying pandemic.

Speaking to CNBC’s Halftime Report on Thursday, Gundlach said that the financial system remains awash with liquidity, i.e., willing buyers, who seem eager to purchase benchmark government debt, a factor that has been a key reason in driving prices up and yields commensurately lower.

“Yields are this low because of all the liquidity in the system,“ Gundlach told the business network.

The 10-year Treasury note

was yielding around 1.32% Thursday afternoon after touching around 1.7% just about two months ago.

In theory, yields should be higher because the Federal…

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