Gundlach Warns Rising Yields Threaten AI Trade, Private Credit; 10-Year Treasury Tops 5%

DoubleLine Capital CIO Jeffrey Gundlach warned on Sept. 20, 2026, that further increases in interest rates could trigger a U.S. recession and a wave of corporate defaults, with risks amplified by elevated AI valuations and private credit market stress. The 10-year Treasury yield has breached 5% for the first time in roughly two decades, driven by oil price gains and inflation concerns. Gundlach said long-dated yields could push past 6%, forcing heavier Treasury intervention. The Treasury has announced a $6 billion buyback of long-dated bonds, but yields jumped on the announcement, signaling limited investor reassurance. Gundlach said rising financing costs could interact with fragility in the AI trade and private credit, warning, "It looks like we're headed toward some kind of collision." He added that the path of least resistance for long-term Treasury yields is upward, and said he is considering avoiding equities.