Why Gundlach says it’s a very unusual market — and what bonds he likes now

Core Insights - DoubleLine Capital is focusing on purchasing emerging market bonds, particularly those denominated in local currencies, as they are seen as a favorable investment opportunity [1][3] - The current investment environment is characterized by rising interest rates, which is a significant shift from the historical trend of falling rates over the past 45 years [2] - Emerging markets have a lower debt-to-GDP ratio compared to the U.S. and are benefiting from a weakening dollar, making local currency bonds attractive due to higher yields and better economic fundamentals [3] Investment Strategy - Gundlach suggests allocating at least 20% to local-currency emerging market bonds due to their higher yields and stronger budget fundamentals [3] - The firm is short on 30-year Treasurys in some portfolios and prefers shorter durations, specifically 3 to 5-year Treasurys [5] Market Predictions - Gundlach anticipates inflation to remain around 3%, exceeding the Federal Reserve's 2% target, especially with potential changes in Fed leadership [6] - There is a concern that the Fed may shift to a more inflationary policy, potentially leading to negative real interest rates [7]