Dual Tier Capital CEO Gunlak warned that the next US recession could trigger a debt crisis and drive long-term treasury yields to soar sharply — disrupting the traditional view for decades that bonds are always safe haven assets during difficult economic times. Gunlak said he is focusing his attention on low-term assets to protect funds under Dual Tier Capital from further increases in interest rates. He also believes that the US government may step up policy intervention to curb the sell-off of bonds. He listed various possibilities, including the Federal Reserve's repeated “reversal operation” and even debt restructuring — that is, cutting coupon payments on existing bonds to reduce interest expenses. “In the event of a recession, the fiscal situation will receive a great deal of attention,” he said at an event in New York. “The budget deficit would easily reach 12% of GDP, generating around $3 trillion in interest expenses each year, which is unbearable.”

Dual Tier Capital CEO Gunlak warned that the next US recession could trigger a debt crisis and drive long-term treasury yields to soar sharply — disrupting the traditional view for decades that bonds are always safe haven assets during difficult economic times. Gunlak said he is focusing his attention on low-term assets to protect funds under Dual Tier Capital from further increases in interest rates. He also believes that the US government may step up policy intervention to curb the sell-off of bonds. He listed various possibilities, including the Federal Reserve's repeated “reversal operation” and even debt restructuring — that is, cutting coupon payments on existing bonds to reduce interest expenses. “In the event of a recession, the fiscal situation will receive a great deal of attention,” he said at an event in New York. “The budget deficit would easily reach 12% of GDP, generating around $3 trillion in interest expenses each year, which is unbearable.”