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DoubleLine Capital CEO Jeffrey Gundlach said on Tuesday that long-term Treasury bonds will perform better next year as deflation risks rise. “Buy long-term Treasuries,” Gundlach told CNBC’s Scott Wapner at the Future Proof FestivaI. “Even though the narrative is just the opposite today, the risk of deflation is much higher today than it has been in the past two years. I’m not talking about next month. I’m talking about sometime later next year, definitely in 2023.” Although inflation continued to rise unexpectedly, the so-called bond king believes that deflation is now a big threat, especially with the Federal Reserve’s aggressive rate hikes and the slowing economy. If inflation turns into deflation, the Fed will be forced to change its monetary policy, which could lead to lower bond yields. Treasury bond prices will rise if yields fall. The 30-year Treasury yield peaked at 3.574%, the highest level since 2014 after a hot CPI report. Benchmark 10-year bond yields jumped to 3.46% on Tuesday, the highest level since mid-June. Cathy Wood of Ark Invest is one of the most vocal proponents of deflation. On Tuesday, she said she already sees many signs of easing price pressures, including falling commodity prices. As for other asset classes, Gundlach said emerging markets are the biggest opportunity. He added that he would not buy emerging market assets until the dollar fell below its 200-point moving average. “When that happens, you want to be big,” Gundlach said.
Credit: www.cnbc.com /