NEW YORK (Reuters) – Jeffrey Gundlach, chief executive of DoubleLine Capital said in a webcast on Tuesday that the U.S. dollar’s next big move will be lower, which could lead to a significant fall in U.S. bond prices and a slew of downgrades.
The fund manager only sees a 35% chance of a U.S. recession in 2020, but believes that when a downturn does comes, the weaker dollar will drive foreign investors out U.S. corporate debt.
Low yields globally have pushed investors into riskier assets and led to the ballooning of BBB-rated credit, the lowest possible investment-grade rating. The decline in quality of U.S. credit poses the biggest risk to bond investors today, said Gundlach.
Reporting by Kate Duguid; Editing by Sandra Maler