Jeffrey Gundlach sees yields peaking, and if he is correct, that could mark the end of the bear market and the dawn of recovery in asset prices across the risk spectrum.
Nearly every financial crisis, which spills into an economic crisis, has its seeds in the debt market.
So in the wake of central bank tightening to combat inflation soaring bond yields, the sell-off in the bond market raised borrowing costs which were also the catalyst for the sell-off in the technology-laden NASDAQ and growth stocks.


“Jeffrey Gundlach sees yields peaking, and if he is correct, that could mark the end of the bear market”
WEALTH TRAINING COMPANY
The eventual central bank focus moves to prevent a systemic crisis, and the great pivot from inflation-tightening monetary policy to loose monetary follows.
So when central bank interest rates are reduced in size, halted, and eventually cut, its bond-buying quantitative easing program commences that is the support price for sovereign bonds and marks peak yields.
Prime Sovereign bonds, US, German, UK, and Japanese are attractive assets since these governments are unlikely to default on their debt due to central bank support, and bond-buying programs.
Unlike stocks, bond investors are guaranteed to receive the capital invested on the maturity date plus yields.
So the treasury two years, with a 4.25% yield is as good as a cash deposit. It is also probably less risky bearing in mind the likelihood of the US government defaulting on its debt is less likely than a private bank becoming insolvent. Treasuries are the safest bonds to own due to the USD reserve currency status. The Federal Reserve can create currency and buy treasuries and currency debasement of the USD is limited due to global demand for USD, particularly in times of geopolitical and economic uncertainties.

“The eventual central bank focus moves to prevent a systemic crisis, and the great pivot from inflation-tightening monetary policy to loose monetary follows”
WEALTH TRAINING COMPANY
Jeffrey Gundlach sees yields peaking and capital flows into treasuries
“Here is where we are now in the U.S. Treasury Bond Market: 2 Year: 4.52% 5 Year: 4.37% 10 Year: 4.13% 30 Year: 4.13% Note how the long end is flat. Sign of yield increase exhaustion. Treasury yields may well be peaking between now and year-end,” tweeted Jeffrey Gundlach on October 20.
Stability in the multi-trillion dollar treasury market is the beginning of a recovery in global markets.
The 10 Year treasury is the yardstick for the cost of global capital. So stabilizing and falling yields are positive for other assets along the risk asset spectrum.
Our take, the stars could be aligning for a recovery in risk assets as the central bank liquidity bounces off its trough and investor sentiment moves out of a depression.
But the caveat to this recovery is geopolitics. The war in Europe has put the world on a nuclear threat footing worse than the Cuban missile crisis, but there is hope. There is chatter in the corridors of western power about de-escalation, a diplomatic solution.