If the government announces a 'Switcheroo' policy where all bonds with coupons higher than 1% would be capped at 1% (and lower coupons left unchanged), it would cut federal interest expense by 75% but would cause 30-50% overnight losses for bondholders. The speaker would profit from this because his bonds have ~1.5% coupons and would not be reduced.

forecastpending

Speaker

Unidentified Speaker — Jeffrey Gundlach Speaks at the Buffalo AKG Art Museum [6xQbscs2ZvI]

Evidence Quote

if they announce well since we can't afford what's now our 4% interest expense on $40 trillion of bonds we're going to do a little Switcheroo we're going to say that if the interest rate that you your bond contractually pays is higher than one it's now one

Source

Jeffrey Gundlach Speaks at the Buffalo AKG Art MuseumDoubleLine Capital
Created: 8/10/2026, 10:50:41 PM

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