According to Jeff Gundlach, Scott Bessent discussed extending maturities and lowering coupons on Treasuries held abroad. This is tantamount to a default. The fact that a sitting U.S. Treasury Secretary is speaking publicly about default should cause foreigners to dump Treasuries.
— Peter Schiff (@PeterSchiff) May 7, 2025
The U.S. Treasury is now openly discussing extending maturities and lowering coupon rates on Treasuries held by foreign investors, a move that financial experts warn could be tantamount to a default. The revelation, brought to light by Jeff Gundlach and Peter Schiff, has sent shockwaves through financial circles, yet mainstream coverage remains scarce.
Treasury Secretary Scott Bessent has acknowledged that the U.S. may need to restructure its debt, though he insists that such a shift is still a long way off. Gundlach, known for his sharp analysis of fiscal instability, has warned that foreign investors may begin dumping U.S. Treasuries if they believe their holdings will be devalued. The implications of such a sell-off could be catastrophic for global markets, leading to higher borrowing costs, a weaker dollar, and increased volatility.
The U.S. national debt has ballooned to $37 trillion, with interest payments consuming a growing share of federal revenue. Gundlach has repeatedly cautioned that without significant spending cuts, long-term interest rates will rise, the dollar will weaken, and bond coupons will tumble. His firm, DoubleLine Capital, has already adjusted its strategy, shifting toward low-coupon Treasuries to hedge against potential losses.
Foreign holders of U.S. debt, including China and Japan, have historically relied on Treasuries as a safe asset. If confidence erodes, the consequences could ripple across global financial markets, triggering capital flight and liquidity crises. The Federal Reserve’s ongoing quantitative tightening has already strained liquidity, making the prospect of a Treasury sell-off even more dangerous.
Despite the gravity of the situation, mainstream media has largely ignored the discussion. The Justice Department’s lawsuit against Alphabet and the ongoing Ukraine conflict have dominated headlines, leaving this potential financial crisis underreported and overlooked.
Sources:
https://www.fa-mag.com/news/gundlach-predicts-tumbling-markets-without-d-c–spending-cuts-81956.html