Jeffrey Gundlach, CEO of DoubleLine Capital, predicts a possible 25% decline in the U.S. dollar and a recession in 2025.
Gundlach's Forecast for U.S. Dollar Decline
In a recent DoubleLine webcast, Gundlach noted that the changing economic climate could support a **bear market for the U.S. dollar**. He emphasized the potential **underperformance of U.S. assets** during a recession. Gundlach explained, "Importantly, Gundlach thinks the dollar will go down and the U.S. market will underperform in the next recession. While this may go against what has historically happened during recessions, the context has changed and the current environment is different." Gundlach, known as the "Bond King," projects a [secular rise in interest rates](https://www.moomoo.com/news/post/54090774/new-bond-king-gundlach-makes-a-heavy-prediction-a-dollar) at the long end, challenging previous trends. He advised **diversifying into international and emerging markets**.
Shift in Investments to Emerging Markets
The prospect of a decline in the U.S. dollar influences **investor allocations** towards non-U.S. assets. [Emerging markets like India](https://www.ainvest.com/news/bond-king-gundlach-predicts-8-dollar-decline-favors-emerging-markets-2506) may see increased capital inflows and positive performance. Financial markets may experience shifts as U.S. equities potentially **underperform in recessionary periods**. **Treasury yields may rise**, affecting bond prices negatively.
Historical Dollar Declines and Market Patterns
Historical parallels exist with previous **dollar weakness periods**, where international and emerging market equities outperformed. Gundlach's predictions align with these historical cycles. If past trends repeat, **cryptocurrencies like Bitcoin** may benefit from inflows as alternatives to the **declining U.S. dollar**. Affected asset classes may follow global risk asset momentum.
Gundlach's predictions regarding the decline of the dollar and potential recession highlight significant shifts in global financial markets and could influence investors' asset allocation approaches.
