Jeffrey Gundlach

Federal, State and Local tax collections plus the unending deficits combined are about 40% of US GDP. Yes, government is 40% of the US economy.

The US National Debt will exceed $40 Trillion before Halloween.

Fed chair Warsh is reported to be considering reducing the number of Fed meetings per year. Perhaps a desire to reduce press conferences is part of the mix.

I knew there was a problem at “I am the science.”

30 year maturity Treasury bond holders want Fed hikes, not more Fed committees.

Bloomberg News: “NVDA in talks on $250 billion backing for Open AI hub, WSJ says”.

Announced after hours on a late-July Friday: the Co-CEO of a $78 billion private credit fund resigned…four days before the announcement. 🤔

For decades the Fed has been following the 2yr UST. Lately, large bond issuance fuels the AI spend boom abetted by iffy ratings. The debt gets placed but soon trades down, suggesting disbelief in the ratings. I expect the raters will soon have to follow the market and downgrade.

The 30 Year UST yield is just 5 basis points below a very long term high.

Anything seems possible these days in the Wild West of private markets. Maybe Fitch will become a captive subsidiary of a captive offshore reinsurance company owned by a domestic insurance company owned by a private credit company owned by a private equity company. Leveraged.

Fitch basically replaced Moody’s as the dominant rater of Mezz (i.e, riskier) CLOs. Could Fitch be “friendlier” to CLO managers? See also my post recently on outstanding CLO upgrades. https://t.co/j0n3LvlH3q

I recommend giving Matt Ward’s “Ox Talks” podcast episode today a listen. “If you ask to redeem you’re put in time-out.” Perfect.

Even as spreads on CCC bank loans are marching wider, Moody’s and Fitch are UPGRADING ratings on hundreds of outstanding private credit CLOs. 🤔

The generic 30 Year US Treasury yield at 5.10% currently is less than 10 basis points below the nearly two decade high, and keeps bumping up against this resistance. Seems unlikely to hold. Even Lacy Hunt has turned bearish, to his credit.

Now that the DOJ is investigating potential irregularities in the valuations of private credit funds (such as “100-to-81 overnight”), I predict the next reported valuations across the industry will show “adjustments” to the downside.

I’ve said for years a 3 party Presidential election could come around 2028. Monotonic developments in the Democrat party since 2016 are confirmation. Also, the always optimistic Social Security Admins say there will be no money by 2032. Which means it is more likely 2029.

Head of the “100 to 81 NAV overnight markdown” said to be stepping down. Could be a harbinger. Serial “heads stepped down” in the GDC. In the present case, it’s maybe a “taking the fall” scenario. If a huge asset manager does “100 to 81 overnight” without assigning blame it must be institutional failure.

SPCX bonds rated BBB were sold at a spread typical of BB offerings. BBB ratings facilitate insurance company investment due to ratings based capital treatment. Absent this arbitrage, SPCX bonds would trade like B rated. Already getting there.

DOJ investigating odd stated NAV behavior by one the largest private credit funds. Ever larger redemption requests across private credit each quarter. Lawsuits alleging valuation fraud and less than stellar liquidity feature explanations. “Don’t worry. Everything’s fine.”

The yellow/orange largest “dot” on the scatter plot is now.

This is the first day in long time AI is not the top story. It is the Fed.

Say private credit fund X owns loan A marked at 100 & private credit fund Y owns loan B marked at 100, but both X&Y know A&B are really worth 65. So X&Y agree to trade “in and out of loans”. X buys B from Y & Y buys A from X, both at a price of 100 & say “See? NAV’s solid!”

AI energy, materials and water needs might be the catalyst for the 4th turning kicking into high gear. Might turn out that human workers will be cheaper than AI, given resource limitations. Imagine that!

When you “dump troubled assets” you take a big loss, No exceptions.

Private credit managers “trading in and out of loans”? “I’ll swap my six dollar bill for your two threes”. I dunno. Maybe. Seen it before.

Bloomberg: “Private credit mangers are increasingly turning to … trading in and out of loans to dump troubled assets and hunt for bargains.” But “troubled assets” have recently been touted as “the opportunity”. And what “bargains” are out there that are not “troubled”?

Forbes, May14, 2026: “A 10.6% Contrarian Play On Gundlach’s Private Credit Hysteria.” Clip and save.

Financial Times : “…retail fundraising evaporates amid private credit concerns”. The owl in the coal mine, perhaps?

The large private credit fund that marked its NAV down from 100 to 81 in January just marked it down again, now to 77. Are all loans down 23% YTD, or are half the loans down 46%, or are one quarter of the loans down 92%? Which is worse?

This week a major private credit fund manager pledged to mark-to-market all positions on a daily basis by year-end. Which means they aren’t doing it now, even internally.