In his November Webcast, DoubleLine’s Jeff Gundlach warned that as a result of rising hedging costs, US Treasury bonds have become increasingly unattractive to foreign buyers. This can be seen in the chart below which shows the yield on the 10Y US TSY unhedged, and also hedged into Yen and Euros. In the latter two cases, the effectively yield plunges from over 3%, to negative as a result of the gaping rate differential between the Fed and ECB or BOJ.

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