DoubleLine Capital: Massive Debt Issuance and Weakening Demand Continue to Weigh on Long-Term Treasuries
nashnova research
DoubleLine deputy CIO Jeff Sherman says he remains short long-end Treasuries, citing massive fiscal issuance + structural demand diversion as unchanged headwinds — yet has begun nibbling at AI-linked credit after the recent sell-off.
Why can't a technical bounce save long-end Treasuries?
Treasuries rallied Thursday on haven flows tied to AI-trade jitters and French market turbulence. Sherman's view: this is just a technical snap-back from oversold levels.
This means → the short-term price recovery hasn't changed the fundamental pressure facing long-duration bonds — the source of selling remains intact.
DoubleLine is significantly underweight Treasuries across most portfolios, with some outright short the long end of the yield curve.
What is actually driving long-end pressure?
Supply side: the U.S. government is borrowing at scale, flooding the market with new issuance.
Demand side: bond yields in Japan and elsewhere have risen, intensifying global competition for capital. In plain terms = overseas investors used to have few alternatives to Treasuries; now Japanese yields are attractive too, so capital is being structurally diverted.
This means → supply is expanding while demand is shrinking — there is no fundamental support for long-end rates to fall.
Why did Sherman publicly criticize Treasury Secretary Bessent?
Sherman criticized Secretary Scott Bessent's attempts to talk yields lower, calling Bessent's language "very aggressive" — essentially "I'm the house, and I know things you don't."
Sherman's retort: "If you want investors to buy in, give them more confidence. Don't try to bully us."
This reflects a clear institutional pushback against the Treasury's "jawboning" approach — the market wants policy signals, not verbal intimidation.
Why is DoubleLine starting to buy AI credit?
Despite remaining underweight tech, Sherman has begun small, exploratory purchases in debt from hyperscale and next-generation cloud providers.
Context: Meta's credit risk hit a record high; CoreWeave — an AI cloud provider funded largely by debt — saw its bonds drop sharply. Market anxiety over AI-related borrowing is peaking.
Sherman's logic: once yields reach 12%, 13%, 15%, that level of return is enough to cushion against the worst outcomes. In plain terms = when the price has fallen far enough, the odds tilt in the buyer's favor.
What does DoubleLine's current positioning tell us?
Rates: defensive — short the long end, underweight Treasuries, betting that fiscal supply and demand diversion won't reverse soon.
Credit: selective offense — hunting for high-yield compensation in beaten-down AI bonds.
This means → DoubleLine is not uniformly bearish. It has made a deliberate split between rate risk and credit risk: dodge duration (long-end rate exposure), embrace odds (high-yield credit).
市场有风险，内容仅供研究参考，不构成投资建议。